Top Tax Return Mistakes To Avoid
It might seem a little early to start thinking about your Self Assessment tax return but ask any accountant or tax practitioner and they will tell you it’s never too early! We asked our tax partner Neill Staff about the top tax return mistakes that people should avoid. His answer was that first and foremost people shouldn’t leave their tax return to the last minute! Here are Neill’s other comments and handy tips on what to do when getting ready to complete your tax return and how to avoid some basic mistakes.
1. Allow yourself enough time to complete the return and get in the right mindset. Completing your Self Assessment tax return can seem like a chore at the best of times and it is tempting to think of “January” as the time that you will get round to it. The trouble is January arrives and then a few days are lost to the new year, and then you’re catching up at work after the Christmas holidays and all of a sudden there’s only two weeks left. Panic sets in when you realise you haven’t kept all your tax vouchers in one place and you suddenly have to speak to your HR department to get a copy of your P60 and P11d. I would recommend that you start thinking about your tax return much earlier, maybe even as early as July or August so that you can collate your documents and complete your return with time to spare.
2. Keep your records in one place. If you have to complete a Self Assessment return then you may well have PAYE income and possible benefits in kind from your employer (company car, healthcare. Gym membership etc). Your employer will give you a P60 and a P11d if you receive any taxable benefits. You might also have vouchers or certificates in respect of charitable Gift-aid donations, qualifying loan interest payments, pension income or dividends. I would recommend that you file everything together so that everything is easily accessible when the time comes to start work on your return.
3. If this is your first return and you do not employ an accountant, make sure you are registered for Self Assessment. If you intend to file your return electronically then you should also ensure that you are set up on the Government Gateway. If you have appointed an accountant then it is probable that they will take care of the tax registration and return filing for you but if you’re doing this yourself then allow two or three months for HMRC to process your requests.
4. If you do employ an accountant then you should give them enough time to process your return and check it. No accountant likes to receive their client’s tax return information at the eleventh hour and why should they? Your accountant will want the time to check the return to make sure they have received all of the information and they will want to give you adequate time to check the return to make sure it’s complete. Speaking from experience, it is very hard to do this when a client sends you their records on the 31st of January and I know of many firms, including Raffingers, that have a cut-off date much earlier in January when we simply do not guarantee to complete a return if the information is provided late. It might sound like a tough approach but over the years almost all of our clients have been converted and the majority of our returns are completed by early January.
5. Remember to make provision for your tax payment which will become due at the end of January. If this is your first Self Assessment return it is possible that your January tax bill will be larger than expected because you may be required to make payments on account of the following year's tax liability. The payments on account are due in January and July each year which can mean that the first January payment under Self Assessment can be much larger than you were expecting.
6. Remember that you are entitled to reduce the payments on account if you don’t think that your tax liability for next year is going to be as high as the current year. Be careful not to over-reduce your payments though as HMRC will charge you late payment interest
7. Finally, please remember to take professional advice if you are unsure about how to complete your tax return or what to include.