It is a time of year that is infamous with most self-employed people, sole traders or business owners; the time to submit tax returns.
If your business is large enough for you to delegate this task to an accountant, then you can take a breath of relief and simply begin collecting information from your business account. But, if you do not have an accountant, it is important to be able to know how to perform this vital task yourself. And correctly.
Why? Because although to err is human, HMRC will often penalise even the smallest mistake on a self-assessment tax return. As it is an expensive error which cost the UK a whopping £33 billion in 2018, they are unlikely to accept an excuse of ‘being tired’ when you filed the return.
Of course, if you realise that you have made an error on your tax assessment once it is submitted, you can hire a fraud solicitor to help you to liaise with HMRC and help to reduce any potential penalties. But when it comes to tax, prevention is better than cure (or remedying the situation) and there are some tips that your fraud solicitor will suggest to avoid the issue from occurring again.
Get your files in order
Thanks to the invention of online banking, you can now track your incoming and outgoing expenses with more accuracy than you would have by collecting receipts.
However, it is advisable before you receive the letter from HMRC about self-assessment to have these files in order, preferably by month, within the requested time span.
If you are busy with running your business and don’t have the time to complete this all at once, dedicate a few hours each week to one step of this process; as any fraud solicitor will tell you, it will be worth it in the long run.
While a day before cram session may have worked with your exams, it won’t work with filling in your tax return!
Take your time when you look through your tax return. Once complete, make sure to check all the information you have provided at least 3 times. Then, take a break for a few hours or a day and check it again. Better to be safe than sorry.
It’s tempting to overlook a payment when you are concerned about how much tax you will pay. But this will not be seen as acceptable by the authorities and can lead to a hefty fine or even time in prison. Don’t risk it!
Get it in on time
It is worth noting that in recent times, HMRC has upped the penalties associated with late-filed returns.
If you have a legitimate reason for completing a late tax return (such as being in the hospital for an extended period), contact HMRC as early as you can and they may be able to offer an extension.
In all other scenarios, you need to get that form filled in on time and submitted!