Are You Ready to File Your Tax Return?

The end of the year is a busy time for many businesses. Not only do you have the holiday season to contend with, but many businesses also have to grapple with year-end accounts and tax return deadlines.

Although tax returns can seem intimidating, the fact is that there are ways to prepare for an upcoming tax filing deadline without resorting to a last minute rush.

A checklist for filing on time

If you feel a bit lost when it comes to tax compliance, the below pointers should help guide you when it comes to collecting the information you need to fill out your tax return for the 2017/18 tax year:

Check if you need to file a tax return

It may seem obvious, but one of the first steps you should take is seeing whether you actually need to file a tax return with HMRC.

Generally, if you are a sole trader that earned more than £1,000 during the year or are a partner in a partnership, the chances are that you will need to file a self-assessment tax return with HMRC. Equally, if you have a company that received a notice to deliver a company tax return from HMRC, then that company will need to file a corporation tax return (known as a CT600).

One quick way for individuals to see whether they need to file a self-assessment tax return is to use HMRC’s free checking tool, which should inform you whether you should file a return with HMRC.

If you know you need to file a tax return, it’s also worthwhile confirming whether you have registered for self-assessment (for individuals) or for corporation tax (for companies).

Check you have all the necessary documentation

The types of records you will need to complete a tax return may vary depending on whether your business operates as a company, sole trader, or as a partnership.

Generally speaking, you should have records that show the amount of income and expenses that arose during the year, along with VAT records (if VAT registered) and PAYE records (if you have employees).

Supporting papers can take many forms, such as bank statements, invoices, receipts, details of any loan agreements, and cash books to name a few.

It’s also important to keep a note of any capital disposals that you made during the year. For instance, if you sold a business asset, make sure you have documentation relating to the asset’s acquisition and subsequent disposal.

Remember, if you’re ever uncertain whether you’re missing any information to complete your tax return you can refer to an accountant or tax adviser for further help and advice.

Double check your numbers

Once you’ve prepared your tax return, take some time to review the figures within the return to confirm that they are right. You want to make sure that the amounts that appear on the return match up to your records.

While it’s not unheard of for figures to be entered into returns incorrectly, having incorrect figures can cause problems.

Such errors may mean, for example, that you need to revisit and amend your tax return at a later date, which can be a waste of time and resources if the error could have been dealt with at the time of initial filing.

More seriously, errors in a tax return may result in you paying the incorrect amount of tax to HMRC and could also leave you subject to penalties in certain circumstances, so they’re best avoided wherever possible.

Don’t be afraid to ask for help

Unless you have very straightforward tax affairs, you’ll likely encounter some issues when you complete your tax return.

Whether you’re unsure which box to fill in, or you’re uncertain of whether a particular expense is tax deductible, the key is to remember that you don’t have to struggle on your own. Asking a qualified accountant or tax adviser for help filling out your return could save you a lot of stress and time.

When should I file my tax return?

The U.K. tax system is complicated, with different regimes in place in respect of corporation tax and income tax matters. As a result, the structure of your business has an influence on when you should file your tax return.

Individuals

Individuals that need to file an income tax self-assessment tax return for 2017/18 have two key filing dates to be aware of:

• 31st October 2018 (if filing a paper return); and
• 31st January 2019 (if filing an online return).

Companies

Corporation tax legislation in the U.K. provides different filing guidelines for companies compared to individuals.

A corporation tax return should be filed with HMRC within 12 months of the company’s accounting period end. An accounting period end cannot exceed 12 months and generally mirrors the financial year that is used to prepare a company’s accounts.

Please note that filing deadlines for both individuals and companies can differ from the rules outlined above, particularly if an individual or company is just starting out in business or ceasing to trade. In such instances, your accountant or tax adviser can let you know the relevant filing deadlines.

Don’t risk penalties by filing late

Remember that filing a tax return late to HMRC can attract penalties, so it’s never a good idea to leave things to the last minute. However, it can sometimes feel as though getting all the relevant information together to submit a tax return is time-consuming, stressful, and frustrating.

Thankfully, there are ways to make your life easier when it comes to preparing a tax return.

For example, working closely with your accountant or tax adviser throughout the year can help. This is because regular contact with your adviser could minimise any potential delays or errors when preparing your return, while also giving your adviser as much opportunity as possible to identify and maximise the amount of tax deductions that your business is eligible to claim.

What’s more, keeping up-to-date and complete accounts throughout the year, for example on online accounting software, should make it easier to keep track of your business’ reportable income and expenses, which can be a real timesaver come tax filing time.

If you’re struggling to keep your financials up-to-date at year-end, why not try using our cloud-based accounting software?

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Further Reading

Understanding VAT Thresholds: When Do You Need to Register?

Spring Statement 2022: What it means for small businesses

How to manage the final hospitality VAT rate increase in AccountsPortal