The January 31st deadline for Self Assessment to be submitted is looming fast and there’s only days left to complete and file your tax return to HMRC.
So if you’re one of the millions of people who still haven’t submitted their tax return – or even started it – how can you set about successfully tackling it at this late stage?
Emily Coltman FCA, Chief Accountant to FreeAgent – which provides the UK’s market-leading online accounting system specifically designed for micro-businesses and freelancers – gives her top tips for completing your Self Assessment at the last minute.
Be pragmatic if you’re going to file late
At this late stage, it’s important to be realistic when it comes to filing your tax return. If you haven’t yet registered your business with HMRC – or if you’re still waiting to receive either your activation PIN or your Unique Tax Reference (UTR) from them – it’s quite unlikely that you’ll be able to do this and get the information you need before the January 31st deadline passes.
But that’s not the end of the world. The worst that can happen in the first instance is that HMRC will fine you £100 for failing to file on time and you’ll also be charged interest for paying your tax late – you won’t automatically get a visit from a tax inspector or face immediate prosecution by the authorities. And remember you can still submit your tax return after the deadline has passed.
Just don’t get lulled into a false sense of security. HMRC starts increasing the penalties for late filing if you leave it too long, and there are also additional charges and interest to pay when it comes to actually paying your tax bill late. Dawdle too long and those penalties will quickly start to add up!
However, if you’ve got your activation PIN and UTR, there’s more than enough time to get your tax return completed and filed on time, provided that you…
Don’t get daunted by hard work
If you’ve got a great accounting system in place – or a good bookkeeping method that you use to stay on top of your financial information throughout the year – then it should be relatively easy to find the information you need to include on your tax return. You’ll have all of the stats about your business income and expenses to hand, which means it’s just a matter of extracting that data and adding any other income you’ve earned throughout the year (such as dividends on shares you own, interest on savings accounts etc…) in your tax return.
On the other hand, if you’re the kind of person that puts expense receipts in a shoebox and only checks their finances once every three months, you’re going to find it less easy. You’ll have to meticulously go through all of those expenses, and check all of your bank payments and transactions, to get the information you need; which could take many hours of hard work.
However, don’t be daunted by putting the graft in. You can’t cut corners when it comes to your business finances and it’s vitally important not to rush your tax return – so make sure you look at everything in turn and double check your calculations. If you don’t, you’re more likely to make mistakes or miss important information out which could mean that either a) you miss out on claiming tax relief on an expense you’ve incurred or b) you get your figures completely wrong and risk being penalised by HMRC for submitting an incorrect tax return.
Make sure you follow the rules
There are many rules and regulations when it comes to tax, so make sure you follow these to the letter when completing your tax return.
For example, be very careful when you’re adding up your income and expenses for your sole trader or partnership accounts. Unless you use the cash basis to prepare your accounts, you have to count income depending on when you did the work – not when the customer paid you.
Furthermore, make sure that you’re fully up-to-speed with the rules surrounding business expenses and what you can (and can’t) claim – especially with regard to travel, accommodation, food & drink, entertaining, clothing and the business use of your home. You can do this by checking your proposed expenses against the info on HMRC’s website, or use another reputable source of expenses information for sole traders, partnerships and limited companies.
Check the forms – and submit them correctly
When submitting your tax return online, you will have to complete everything and file the form before midnight on 31st January 2015 otherwise HMRC will issue an automatic fine of £100 – and this applies if you’re even a day late and even if you don’t actually owe any tax!
There are a number of ways you can do this, which include:
- Fill in the Self Assessment forms on HMRC’s website and submit them there once they’re complete
- Use alternative technology. For example, if you’re a sole trader or the director of a Limited Company, you can complete and file your Self Assessment from directly within FreeAgent, without needing to use HMRC’s website.
- Use specialist software such as TaxCalc to help fill in your tax return, before you then use HMRC online to actually submit the forms
Make sure you complete every section correctly and leave plenty of time to go through each part with a fine toothcomb before you submit it. Remember that a single, simple mistake or omission (such as not ticking the confirmation box at the end) could result in your tax return being rejected by HMRC and you being fined.
If you still have any concerns about Self Assessment – or if you don’t feel 100% confident in submitting your tax return – it may be a good idea to speak to a qualified accountant who will be able to check it for errors. Just bear in mind that it’s likely to be quite expensive to hire the services of an accountant at this very late stage in January – so be prepared to pay a high premium if you have to find one from scratch.
Don’t forget to pay
Once you’ve submitted your tax return, don’t get lulled into a false sense of security. There’s still one important step left, which is to actually PAY your tax!
HMRC will charge you interest if you do this late and will also impose penalties on late payment, so it’s important to pay your tax as soon as you can if you want to avoid getting hit with a hefty – and growing – fine!
Emily Coltman FCA is Chief Accountant to FreeAgent, which provides the UK’s market-leading online accounting system designed to meet the needs of small businesses and freelancers.
FreeAgent enables sole traders and directors of limited companies to “Fast File” their Self Assessment tax returns from directly within its award-winning system, rather than through HMRC Online. Discover more at try.freeagent.com/self-assessment
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