Anyone who’s ever filed their taxes at the last minute knows what a rush it can be. From unresponsive tax portals to missing documents to the fear of fines, it can be extremely stressful — and yet people keep doing it, year after year.
If one of your New Year resolutions is to be more organised, filing your Self Assessment tax returns on time is a great place to start. The best part is, your accountant can help you out hugely. Here’s how:
#1 — Avoid the last-minute rush
Roundabout 31st January is when all the stragglers will be overwhelming your accountant with their last-minute returns. That’s when they are most overworked and may not even be able to complete your tax return in time.
It can also be difficult to retrieve documents or financial statements from your bank at the last minute, especially if you’re submitting those retrieval requests on paper.
Plus, the HMRC Self Assessment portal can sometimes crash from the overwhelming number of people logging in. The bottom line, there is no advantage to filing late! Make things easy for your accountant by prioritising Self Assessment early on in the year.
#2 — Save yourself from late filing penalty
The HMRC is not kind to people who miss the filing deadline. There’s an instant £100 penalty if you don’t file by 31st January, and it keeps racking up after that. Naturally, you won’t want to pay the government any more than you have to. So submit early, which gives you time to collect any last-minute information that your accountant identifies as necessary.
#3 — Know your tax liability to have some time to make the payment
The sooner you get all your papers in order, the sooner your accountant can tell you exactly how much tax you owe. This gives you enough time before the deadline to budget for taxes and clear your dues. The HMRC charges interest on outstanding amounts if you haven’t arranged a ‘time to pay’ arrangement with them.
Avoid that stress! Plus, the HRMC can send you any tax refunds you are owed much quicker when you file early. You can then use that extra cash to plan the rest of your year more effectively. Utilise this opportunity when you can and file the returns before 31st January, 2022.
#4 — Discuss how you can save tax during the next tax year
Your accountant has more time to figure out how you can save on tax next year based on your cash flow patterns and personal circumstances, when you submit your documents early. The two of you can then discuss ways to reevaluate your expenses and incomes accordingly. By being punctual about Self Assessment, you get to save more money — what’s not to like?
#5 — See if you can move your sole trader account to a limited company
As a sole trader, you and your business are inseparable, which means that your personal assets can be at risk if your business goes under. As a limited company, though, this is not a risk.
By filing your tax returns early, you can consult your accountant about the pros and cons of moving to limited company status, including any tax savings you might make that way.
If your accountant does recommend the change, you will need to contact the HMRC to update your status — which, again, takes time and thus, necessitates early action.
Trust your accountant
While you’re the one running your sole trader business or your personal financial affairs, when it comes to filing tax returns, let your accountant be the boss. Accountants feel the most stressed over clients who think they know it all and try to run the show — don’t be one of those!
Collect documents and stick to timelines as your accountant asks you to. Then, trust that they’re handling your Self Assessment with the utmost care and expertise. You’ve hired your accountant for a reason — you count on them to help you file your returns more accurately and knowledgeably than you can manage on your own.
Help them be efficient by prioritising your Self Assessment and getting things done before the end-of-January rush. Your accountant will thank you for it, and your business will get the all-clear much sooner from the HMRC.