For the directors of limited companies, the yearly Self-Assessment Tax Return can be a minefield, fraught with confusing terms and routinely put off to the last minute. If you need to submit a Self-Assessment, it’s imperative that you get it in on time and guarantee it’s free of any mistakes. Keeping your records in order and your bookkeeping up to date will help to ensure that you can to submit your return with minimum stress and hopefully no slip-ups.
HMRC are becoming increasingly vigilant of mistakes, and if they have reason to believe there are any intentional errors, it can be costly. To help you avoid the common pitfalls, take a look at these five mistakes that are frequently made while completing tax returns.
1. Missing the submission deadlines
We all run busy lives and missing the submission deadline for your Self-Assessment Tax Return is one of the simplest and most frequent mistakes. The best way to avoid this is to submit your form as early as possible. Don’t worry about having to complete the online form all in one go; you can save and come back to it whenever you’d like to update it; without losing any information. Online Self-Assessments need to be submitted by 31st January. Failure to submit your Self Assessment by the deadline will leave you with a penalty from HMRC (£100 if your return is up to three months late).
2. Incorrect numbers
We always recommend that you check, and double check, the figures and calculations in your Self-Assessment for any errors. Filling in the wrong amounts is easily done, especially if your record-keeping is unruly or incorrect. Remember, even if your return is completed by a specialist accountant, you are still responsible for its accuracy so be sure to give a thorough review prior to submission. HMRC can seek prosecution for any deliberate efforts in your tax return and are increasingly likely to rule any mistake as intentional. However, if you do realise that you’ve submitted your Self-Assessment with errors, you have 12 months from the due date to correct them.
3. Failure to declare all forms of income
You need to ensure that all relevant income is declared on your tax return, this includes:
- Income from all types of employment
- Income from letting properties
- Income from pensions
- Foreign income (including evidence of tax paid abroad, if already done so)
- Government benefits including maternity/paternity pay, statutory sick pay and job seekers allowance
- Capital Gains
- Employee share schemes
- Interest/dividends from savings, bank accounts, building societies investments or Trusts etc
A full list of declarable income can be found here, failure to declare income from any significant sources can result in prosecution. However, some items can be excluded from your Tax Return income, including:
- Interest, dividends or bonuses from tax-exempt investments, such as ISAs
- Premium Bonds and gambling prize winnings, including the National Lottery
- Interest and terminal bonuses from Save As You Earn schemes
- Interest awarded by a UK court as part of an award of damages for personal injury or death
4. Not enclosing supplementary pages
If you have any additional income not covered by your main tax return, you will need to include supplementary pages. Handily, while completing the return online, you’ll automatically be alerted if any pages are missing.
Supplementary information which may be relevant include:
- Income from letting properties
- Income from share schemes
- Stock dividends
- Life insurance gains
- Business income receipts taxed as income from the previous year
- Interest from gilt-edged and other UK securities, deeply discounted securities and accrued income profits
- Tax reliefs not found in the main part of your tax return
- Foreign earning not taxable in the UK
- Lump sums or compensation payments from your employer or a previous one
5. Incorrect National Insurance (NI) number or Unique Taxpayer Reference (UTR)
It’s extremely important to ensure both your NI and UTR numbers are correct, as a mistake in either could invalidate your tax return. Your NI will have been given to you when you started working and can be found on old pay slips or tax documents. Your UTR is a ten digit number. If you’ve previously submitted a Self-Assessment Tax Return, you’ll find it on any of your correspondence with HMRC.
If this is your first time filing a Self-Assessment, you need to alert HRMC by completing an online form; they’ll then send you a UTR. It takes HMRC up to 6 weeks to issue an individual with a UTR number, so be sure to apply with plenty of time.
Check, double check and triple check
If you ensure that you’re on the lookout for these mistakes as well as thoroughly reviewing for any other potential errors or omissions that may crop up in your Self-Assessment, your submission should be clear sailing.
For all our clients on our Proactive or Managed packages, we prepare and file their Self-Assessment Tax Returns at no extra fee. Take a look at how our award-winning software and proactive service could help you take the hassle out of your company’s finances and make achieving your business goals a breeze.