7 tips to help beat the self-assessment tax deadline
With just a few days until the January 31 deadline, Kashflow advises small businesses on what to remember and how to better prepare for next year
One of the most challenging tasks start-ups and new business owners face in their first year of operating is the annual self-assessment tax return, and it’s a challenge that often results in a final week rush to meet the taxman’s end of January deadline.
HMRC has said that 6% of all of the country’s tax returns (more than half a million returns) were sent in on deadline day itself last year.
As daunting as the self-assessment process is, getting your return filed on time (and paying what you owe) is crucial for avoiding the late filing fees that are automatically incurred if you miss the January 31 deadline.
You'll get an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time. You'll then have to pay more, or may have to face ‘enforcement action', if you don't send your tax return back after three months of the tax deadline passing.
Here are KashFlow’s seven top self-assessment tips:
Clear the confusion
Not sure where to begin? Not sure what to include? Panicking because Sunday is looming? First things first! You need to regroup and address the concerns preventing you from starting your submission. Climb online and make your first port of call the HMRC self-assessment webpage, where there are guides and full explanations of what to do. They also have useful videos available, online chat sessions, and even a Twitter presence to handle queries.
There is also a helpline, but remember that this will be busy, especially this Saturday when the helpline hours end at 4pm. The helpline number is 0300 200 3310. The helpline will not be open on Sunday 31.
Organise your paperwork
Scrambling to find crucial bits of documentation that you’ve filed somewhere is guaranteed to add unnecessary panic when you are in the middle of filing your return. So before you get underway, organise all the relevant paperwork you are going to need for your submission. HMRC has a full list of what’s required here. Also, make sure you have your ID and password for HMRC’s online self-assessment portal.
Split your submission into manageable chunks
Filing your tax return online has a serious benefit in that you can do it in sections. You don’t have to cram your submission into a few hours, so instead schedule different parts of your return for completion over the next few days. This is a much more manageable, realistic method of getting your return done without getting overwhelmed, bored or harried.
Check, double check and then check again
Splitting your time over the few remaining days before the deadline also means you have the opportunity to thoroughly check your submission for mistakes. Spelling errors, incorrect figures and more can impact your return, so triple check. Remember, if you do make a mistake on your tax return and don't notice it, you’ve normally got 12 months from the return submission deadline to correct it.
Last minute filing adds a huge amount of stress to already stressful lives of small business owners, so with this in mind, here’s some more advice for a better plan of action to avoid this panic next year:
Invest in accounting software
Too late for this year perhaps, but cloud accounting software allows small businesses to simply and easily manage their accounts and keep accurate records. Admittedly, this is in our interests but options such as integrating add-on applications like DropBox and Receipt Bank to include and manage your business documentation with accounting records can help you keep everything in one, accessible place. Using accounting software, with a self-assessment module built in in our case, means that, come tax season, everything needed for self-assessment is easy to produce and access.
Invest in an accountant
The service of an accountant can be critical for a growing business, and not just over tax season. Develop a relationship with your accountant before the tax period, so that you can learn from them early on what is needed to stay financially in check. Plus, if you have invested in cloud accounting software, it means your accounts information will be up-to-date and accurate, leaving you accountant more time to advise you on your business instead of wasting billable hours sorting through your receipts.
Don’t leave it to the very last minute
It is tempting to leave everything to the very last minute, but as soon as you get reminders from HMRC (and from your accountant) about the next tax deadline, try to get your return finalised in good time.
Alex Bell works for cloud accounting software provider KashFlow, click here to find out more.