How To Approach Tax Returns

This article will look at ways to make the experience of preparing and submitting tax returns as stress free as possible, outlining some of the general considerations, and pointing out the common pitfalls.

The tax returns ‘season’ is now getting into full swing, and my office will be contributing to the filing of the many millions of tax returns that need to reach HMRC by 31st January 2015. These returns will cover both income and capital gains for the year ending 5th April 2014.

Who Needs To Submit Tax Returns?

Tax returns are mainly for:

  • Self-employed workers
  • Higher paid employees
  • Company directors
  • Individuals with over £50,000 income and claiming child benefit
  • People with overseas income
  • Those with loss relief claims
  • Anyone in receipt of untaxed income

Remember it is the responsibility of the tax payer to decide whether or not they need to submit a tax return, if you are unsure about this get in touch and we can advise you.

At the time of writing this piece it is too late to submit a paper return (deadline 31st October 2014), thus it has to be submitted online via the HMRC website, log onto the HMRC site and register for the service – if you use an agent (like ourselves) then they should be set up to file on your behalf, obtaining a tax reference (UTR) is a must though.

General Considerations

tax returnsA check list is a good start point, identify what sources of income and gains you have for the year, for example – employed, self employed, bank interest, etc. and then consider what documents you have and those you need. The figures that are entered onto the return should ideally be verifiable and based on good records. A return should be prepared on the assumption that it will be investigated. Make sure all records are kept together for example P60’s, P11d’s, bank and building society statements. The majority of tax investigations begin by looking at the standard of the taxpayer’s record keeping.

There are a number of key dates in the tax filing calendar, for example if filing online then the requisite date is 31st December 2014 if tax is to be collected via PAYE, 31st January 2015 is the normal final deadline to submit the returns and pay any tax due – if penalties and tax are to be avoided.

Common Mistakes:

  • Failure to complete a separate Supplementary Page for each individual employment
  • Incorrect claim for Personal Pension Premiums
  • Entering pay but not the tax deducted
  • Claiming Capital Expenditure (instead of Capital Allowances)
  • Failure to complete all of the self-employed pages correctly

Other Mistakes:

  • Failure to sign and date the return
  • Entering notes on the return such as “information to follow” instead of entering actual figures
  • Attaching schedules and not including figures within the return
  • A yes’ tick has been entered in one of the questions 1 to 9 on page 2 of the Tax Return but the supplementary page has not been forwarded with the Tax Return.

Starting the return earlier is advisable as this will highlight and rectify any information deficiencies, give us time to access any advice and support, and ideally keep stress levels to a minimum.

Thanks For Reading

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Get in touch if you have any further queries and to see if we can help you with your business and accounting needs.