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Self Assessment: Ending A Grim Month, Creating A Brighter Future

It’s late January, and the post-Christmas party hangovers are but a distant memory, while the real headaches are gathering force. A study published by AAT (Association of Accounting Technicians) last week showed that January is the main month for people to sort their ‘life admin’ tasks – but 56% of us struggle to keep up with everything that we are required to do. 

One of those often dull, often complicated, but necessary tasks is to complete your Self Assessment return by 31 January, a deadline now looming extremely large. To recognise this, we spoke with a number of small business owners and experts about tax return woes, and in some cases how they’ve learnt from painful experiences of the past…

 

Jen Smith

“Learn from your mistakes”

“The first two tax returns I submitted as a self-employed person were stressful. The first one I did myself, so I spent hours trawling the net for advice, constantly worrying I was going to fill it out wrong. By the time of my second tax return, I hired a bookkeeper to help, and whilst she did most of the legwork, my paperwork was a real mess. It took me days to get it into any coherent order for her to work from.

“This year, however, was entirely different, as I had most things in order, and I sorted it in April, months before the deadline. As I write this, I have to admit it’s a pleasure being in January and knowing it’s all taken care of. All I have to do now is pay my balance.”

Jen Smith, freelance writer and content strategist

 

 

Andy Cordina

“Save the stress – use an accountant”

“The very first year I did my Self Assessment, I took a day off work to get it all done. After a bit of research online and a rather embarrassing phone call to HMRC, I realised that my Self Assessment wasn’t due until the following year. Mega Fail. So make sure you’re working to the right deadlines before you even set off to do your return.

“If you’re not great with numbers, it’s totally worth talking to an accountant or bookkeeper. You can either spend hours of your time stressing that you’re not doing things right or pay someone to do it for you. You need to decide what your time is worth, and I know where I’d rather spend my time.”

Andy Cordina, founder of Bettie Confetti

 

 

Henry Cooper

“Don’t leave it to last minute”

“The key to a successful tax return is getting it done as soon as you can and being as organised as you can. For our clients who have detailed their expenditure, a tax return could take five minutes or so – especially those who have registered a personal tax account which regularly updates your HMRC records throughout the year. Also, don’t be afraid to ask others for advice, which can help you get your return correct first time.

“If you do make a genuine error on your return, this doesn’t automatically mean HMRC will treat you as a guilty party. We’ve had a couple of instances where clients have submitted returns in good faith, and HMRC has helped them amend any minor mistakes that have crept in with no penalties due. There’s talk that HMRC will move to a points system in future, where repeat offenders will be punished as their penalty points accrue. This seems like a good idea which will punish those who need to be punished and give sympathetic consideration to others.”

Henry Cooper, owner of BirchCooper Accounting Services Ltd

While excuses involving scribbling, dogs, postmen, boats and wasps provide the lighter, more humorous side of annual tax returns, the fact is that missing the deadline is no laughing matter. A late submission – even if you are minutes past the midnight deadline – will trigger an automatic £100 fine, and there are further incremental penalties that accrue depending on how late your return is.

Sally Evans and Kim Farrall, Off Grid

“Have a tax return party”

“I was so worried about doing my first return that I started mine in November. I wanted it out of the way before Christmas, and I just had a feeling that it wouldn’t be a simple case of filling it out for a couple of hours. And it wasn’t. I hadn’t realised that we needed to do our partnership statement first (probably a very basic mistake!).

“Happily, I found that HMRC are actually pretty helpful if you give them a call. It’s much easier speaking to a human, rather than googling and getting about 10 different answers to the same question.

“If you can – I’d recommend finding a self-employed pal to have a tax return party with! Sit together one morning with a good stream of brews on the go and help each other/sense check as you go. Then reward yourself with a nice big walk somewhere beautiful.”

Kim Farrall, co-founder of Off Grid

 

Amanda Swales

“Don’t assume”

“The most common mistake that I find people make is leaving out Employment/ Pension Income because they just think HMRC know about it anyway. It is so important to declare this information too.

“Some individuals, especially landlords, think if they have not made a profit, they do not have to report their property income. This still has to be declared (the loss) so that if a profit is made in subsequent years, you can offset the losses from the current year’s profits to reduce your tax liability.”

Amanda Swales, Director at GoSimple Software

 

“Don’t wait around – even if you think you’re going to miss the deadline”

“Completing your tax return, especially if it is for the first time, can feel a tremendously daunting prospect. Hopefully, you’ll already have navigated the sign-up process – registering, receiving your Unique Tax Reference (UTR) and creating your new account can take the best part of a month even before you start filing – but it’s worth getting all your paperwork from the last tax year together as well. There are various documents that you will need to hand, and this guide can help self-employed workers know exactly what is required for HMRC.

“Even if you haven’t started your return yet, and now realise that you won’t be able to submit in time for Wednesday’s deadline, it’s still worth completing your Self Assessment as soon as possible. This is because penalties for late submission will continue to accrue over the coming weeks and months.”

Darren Nicholls, Product Manager at Informi

 

Informi has produced a handy guide for sole traders on the Self Assessment process and your obligations as a self-employed individual. 

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