Filling in forms can be tricky business, especially when there’s a deadline rapidly approaching, and you’re legally obliged to get the information across before then.
When it comes to tax returns, there’s a whole year to get them ready – or at least have the figures sorted, but every year, there’s always millions of people who leave it to the very last minute to get it done, and risk HMRC issuing them with the dreaded £100 late penalty.
To help make the process of getting your return done and in, easier, we’ve identified some of the Most Common Mistakes Made with Tax Returns and given you some advice on how to avoid making the same errors. and give you some advice on how to avoid making the same errors:
Leaving it Too Late to Register
If this is your first year of Self Employment, and you’ve not registered with HMRC yet, you won’t have a Unique Taxpayer Reference number (also known as a UTR) and won’t be able to file your return online without it.
The process of registering with HMRC can take several weeks, so you need to contact the tax office now, or register online, and get the process moving to ensure you’ve got your UTR in time.
Putting Expenses in the Wrong Boxes
For many people, this will be the first year of including the Self Employment Income Support Scheme (SEISS) grant into their return. It’s important that this figure is not included in the ‘Other Allowable Business Expenses’ box but is actually included in the Calculating Your Taxable Profits section where there is a specific box for it.
When calculating which SEISS payments to include, you need to check the dates on which you received the payment; the first, second, and third SEISS grants received on or before 5 April 2021 should be included on your 2020 – 2021 return.
Getting the Figures Wrong
Depending on your business, and the complexity of your return there could be a lot of figures that you’ll need to input, and unlike some other governmental forms, where they want a general idea of an amount (usually rounded up or down as appropriate), your tax return isn’t like that.
When HMRC say they want a figure from you, they don’t want an approximation or a rounded figure, they want the exact amount – and if you can’t provide it, you’re going to need to tick the box that says you’ve used estimated or provisional figures.
Assuming the Pandemic will Give You Automatic Extra Time
With COVID making it difficult for some businesses to get their accounts together, HMRC have confirmed that they will give, ‘consideration’ to COVID-19 as a reasonable excuse to make appeals, but since 1 October 2021, the tax office is no longer allowing bulk appeals (up to 25 returns at a time) and any appeal on a late return will need to be made online or with the SA370 form.
Believing You Have a Reasonable Excuse to Be Late
HMRC consider ‘reasonable excuses’ to be:
- The death of a partner or close relative shortly before the return is due
- An unexpected hospital stay which interferes with tax affairs
- A serious or life-threatening illness
- Computer or software failure whilst preparing your online return
- Service issues with the HMRC platforms
- Fire, flood, or theft that prevents you doing your return
- Postal delays you could not have predicted
- Delays due to personal disability
They do not consider someone else failing to file, payments bouncing because of lack of funds, finding the online system too hard, making mistakes on the return, or not being reminded by HMRC as acceptable excuses for being late.
There is generally some level of leeway with people filing on the very last day of the month as their system is generally under enormous strain, but it’s far better to get the return completed in ahead of time, rather than fight with the submission and letters that will follow.
Preparing your tax return is a year long chore, that requires you to keep your accounts up-to-date, and your details ready to hand when it’s time to submit your return. Make sure you’ve got all the pertinent details, including the registered name of your business, the date it started, your UTR and National Insurance Number (NINO), the incomings and outgoings of the business, expenses, and any other relevant information.
If you’d like help with your tax return, and your business accounting, our advisors are here to help you not only manage to be on time, but to stay on top, and help your business grow.
Now you know the Common Mistakes Made with Tax Returns, and How to Avoid Them, why not Contact us today and discover how we can help.