Preparing to Submit Your Tax Return

Click here to get a Free Quote for your income tax return

Do you have to complete a self-assessment tax return? Maybe it’s your first time and you want to get it right without generating an HMRC investigation. Is it possible to deal with your tax affairs in order to ensure you have the minimum of trouble from the tax authorities? There is no need to let it worry you but there are a number of key things you must do.

Firstly, keep all the relevant records carefully. You have a legal obligation to do this and HMRC are clamping down strongly on taxpayers who keep poor records. But it also makes sense. The clearer the evidence, and the more quickly you can provide it; the easier your tax return is to complete and the sooner any subsequent argument is settled. Simply having a file, folder or tray to put in your tax papers for the year makes completing the tax return so much simpler. When you have finished the return, then simply file them away and keep the file for seven years.

Secondly, you need to make full disclosure of your affairs. If you have income that you have not informed HMRC about, then you are concealing it from them. They will assume that you are intending to avoid tax illegitimately and that will incur a tax-geared penalty in addition to the usual fines and interest. HMRC now have the power to fine you up to 100% of the tax owing depending on whether you intended to deceive and how much you co-operated with their enquiries.

So, tell the truth. It’s not clever to try to deliberately understate your tax liability. If you use an accountant you may not be aware that they are legally obliged to make a Money Laundering Report if you are deliberately trying to defraud HMRC – and there is no lower limit to when they must make a report. If you want to save tax, then make sure you get good advice and do it legitimately. And if you are unsure about anything, make sure you give an explanation on the white space provided on the tax return. You have then made a full disclosure and, even if you have made a mistake, you have co-operated fully and can reasonably expect to have no additional penalty added.

Finally, many people find their tax return is investigated simply because they have completed it in a way that look suspicious, like claiming you have 1,000 of expenses in your self-employment and recording £8,000 in the box marked ‘Other’. You don’t need to be a technical expert to realize that looks wrong. Just stand back when you have completed the return and try to look at what you have written through the eyes of a suspicious tax inspector. You clearly do need to use your common sense and, preferably, the services of a professional tax advisor. You would expect me to say that, but it is true that the best way to ensure the minimum of difficulties with HMRC is to use a professional.

Certainly, if you have a capital gain to declare it would always be wise to consult a tax advisor as this is a complex area and it is easy to end up costing you more in tax to do it yourself than it would to employ a professional. Similarly, the foreign pages can be difficult to negotiate without experience. Self-employment is not particularly complex to declare but you do need to be sure that you have claimed all the allowable expenses that you can to. Too often, taxpayers sell themselves short and pay more tax as a result.

So prepare well, saving all your records during the year. Get the necessary paperwork assembled in the relevant categories – employment, rental income, self-employment etc. Then declare everything on the return, checking you have missed nothing. You should also consider using the services of a professional advisor. Completing your tax return need not be a headache if you give yourself time to get it right. Don’t therefore leave it until the last minute – take action now!

Article Source:

Leave a Reply