Common Mistakes to Avoid On the Personal Tax Return for Directors
It is easy for everyone to make mistakes when it comes to filing the personal tax return therefore it is fairly common and especially when you are starting a business and it is your first time filing your own tax. Natuarally as a director of a company you are busy with many things on your to do list.
When making a mistake in your tax return, what happens is that the the tax authorities,e.g. HMRC in the UK, or the IRS in USA, contact you to correct it and evidently this could delay the refund of your money. Or you will have to pay more in overdue tax and penalties.
People who file a paper tax return are far more exposed to making basic mistakes that are easy to avoid when using doing an online tax return. The e-file is the fastest, most secure and accurate way to file your income tax return.
Here’s a list of the eight most common mistakes people make when filing a tax return:
1. Missing Unique Taxpayer Reference (UTR): Many people misplace this number, or they forget to put it on the tax form. Make sure you enter all reference numbers and national insurance numbers on your tax return exactly as reflected on your HMRC notice letters or card. Also, remember that your personal UTR is different to you company UTR.
2. Incorrect Names: Make sure you spell correctly the names of each and every one of the names on your tax return and as they appear on your HMRC notice letters. Some of our clients change thier names after getting married, ensure that you inform HMRC of your name change. Likewise, if you change addresses ensure that you inform your tax authority.
3. The Errors In The Business Status: Occasionally people get confused with all of the different pages on the personal tax return and make a mistake with the business status. We understand that the wording and language for tax returns in confusing so this is more common than it seems.
For example, some people mix-up employment, self employment, sole trader accounts, personal expenses and corporation tax payments. In this case we recommend using the our Interactive Call Back that can offer you assistance in choosing the correct business status that corresponds to you.
4. Mathematical Errors: This is also one of the most common, since it is very easy to go wrong with math, we always recommend checking your operations, bank statements and bookkeeping two and three times and with calculator or using a spreadsheet.
There are 22 steps that our accountants follow to ensure accounts are accurate, logical and tax efficient for company directors. Take special care when adding or subtracting or using a form or worksheet to do your calculations. It is also important to remind you that tax preparation software does not always do all of the math automatically.
5. Mistakes in Credit or Deductibles: You would be surprised by the many taxpayers who make these types of mistakes when determining your Working Tax Credit, Child Benefit, Child Tax Credit, Allowable Deductions and Non-Allowable Deduction. Here again we recommend using an online tax return service, and be sure to provide as much information as possible.
7. Missing Bank Account Numbers: This happens in case you have to choose the direct deposit of your refund. The fastest and safest way to expedite your tax refund is by choosing the direct bank deposit on your personal tax return.
8. Forms without Signatures or Dates: This is more common when people are sending paper tax returns or accounts. You have to see it this way an unsigned tax return is like an unsigned check, it is not valid, it is incomplete. And remember that if you are filing jointly with a spouse, or partner, you both must sign.
9. Fail to Login to Online Services: Unfortunately many people cannot login to the HMRC online services, or personal tax website, when they are doing it themselves. It can take 5-7 days to get new login information, which often means missing the deadline and being hit with more late penalties from £100 – £300, or more.
When filing your tax return online, get assistance early on, or ensure that you have the correct login details at the start of the tax year.
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