How to beat the tax deadline

More than three million people have not yet filled in their tax return, and last year 800,000 paid the price for failing to file on time

There are more than three million people who need to to make sure their tax return reaches the Inland Revenue on time this month. Last year, 800,000 or more taxpayers missed the deadline, many because they are unsure how to fill in the forms.

Steve Thompson, an IT manager with a printing group, was among the thousands who received a tax return for the first time, and was steeling himself to tackle another return when he had a shock. "I arrived home last Tuesday evening and opened a letter from the Revenue dated 28 December 2001 telling me, 'You do not appear to have sent in your tax return and as a result you have been charged a penalty'.

"I didn't want a tax return to begin with, because I thought my employers calculated the tax for me. I've been trying to get through to the Revenue on the phone to sort it out, but the number is constantly engaged."

The Revenue probably decided to send Mr Thompson a tax return because he has recently entered the top 40 per cent tax bracket, and they would want to see if he has any other income that should be taxed at higher rates. But higher rate taxpayers do not automatically receive tax returns every year, because the pay-as- you-earn system can generally cope with them unaided. So if Mr Thompson's affairs are reasonably straightforward he may not get one next year.

The Revenue will certainly have had all the details about Mr Thompson's employment income already, so his return will be used to confirm that these figures are correct. This is no bad thing, because many people do operate for years under incorrect tax codes and pay too much tax. Nevertheless, it does mean extra work and worry for the taxpayer.

Most of the information Mr Thompson needs to supply will come from the P60 form containing end-of-year details his employer will have sent him, the P11D return of benefits form (although Mr Thompson doesn't have any), bank statements for interest received (minimal as far as he is concerned) and other income and expenditure details.

Happily, Mr Thompson keeps all tax-related documents in a folder, so at least he knows where they all are and can summon them easily as he goes through each part of the return.

It is important to keep your tax-relevant records for a couple of years after each tax year, even if you do not have to fill in a return, because this is a little-known statutory requirement for everyone. And it is extremely useful to have the previous year's documentation and receipts to hand if you are suddenly asked to complete a return out of the blue, as happened to Mr Thompson.

"I was worried about doing the form wrongly and making mistakes," he says. "All the talk of penalties bothered me and made me put off doing the form. Now, though, having been through the preliminaries, I am confident I can follow the necessary questions and go carefully through it; I may even be able to manage the tax calculation guide." But, particularly after his frightening experience this week, he has resolved that if he gets a return next year, he'll do it as quickly as he can.

The writer is a tax partner with PricewaterhouseCoopers and president of the Chartered Institute of Taxation