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How to Avoid the Panic Surrounding Tax

26th Nov 2014
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Paying tax is just one of life’s necessary evils. Conducting your own accounting can be tricky, yet hiring a professional is expensive. That said, if you’re left with no other option than to give it a shot yourself, there’s absolutely no need to worry. Follow these tips and you shouldn’t have a problem getting your forms in on time and correctly.

Find out what you need to disclose

Not every business has to file the same documents. What exactly is required will vary depending on your business model – sole trader, limited company, etc. – and how much money you earn. Check with HM Revenue and Customs to find out what tax band you come under. Don’t be afraid to get on the phone and make enquiries. Taking a few minutes to double check what’s required could save you hundreds in unnecessary penalty charges.

Give yourself plenty of time

You don’t need days to fill out a self-assessment, but give yourself at least a few hours. If your tax return is late you will have to pay a £100 penalty; this charge is applicable even if you don’t have any tax to pay. The longer you miss the delay the greater the fee. Just one year of delays could equate to up to £1,600.

Register with HMRC’s Online Services

When you have registered for self-assessment you’ll be given a Unique Taxpayer Reference (UTR) number – do not lose it! Once you have this number you can register with HMRC’s Online Services, which allows you to complete your tax return online.

Keep Your Financial Records Organised

Filing a tax return is essentially just the process of transposing your company information; therefore, the more organised you are the better. The majority of information that you’ll need will be on your bank account statements; however, remember that most banks won’t allow you to access statements online that are more than a few months old. Always keep paper copies to hand for at least two years prior, or order copies well in advance of the deadline.

Download accountancy software

There’s plenty of free open source accountancy programs, so there’s no excuse not to keep a digital filing system. Keep track of your income and purchases in real time and your filing will be a whole lot easier. If you use accountancy software, however, make sure you keep all of your invoices, receipts and statements handy just in case HMRC wants to check your calculations.

Hire an accountant or bookkeeper

If you’re really lost or stressed about making a mistake, hire an accountant or bookkeeper to help you. While they may seem like an unnecessary investment, they will know all of the latest legislations and will often take responsibility if penalties arise. In addition, accountants will know all of the relevant tax breaks relating to your sector, which could significantly reduce your final bill – often enough to cover their fee altogether.

Sometimes problems occur. If you take all the right steps, file your tax return correctly, and still end up with penalty charges, SA Law recommend hiring a legal representative that’s well-versed in business disputes.

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