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Reasons why your clients should be filing their self-assessment tax return early

26th Apr 2024
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Initor Global UK provides premium outsourced services to UK accountants and businesses.

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Every year, accountants across the UK brace themselves for the inevitable surge in demand for self-assessment and personal tax work over the winter months. Notifying your clients about the benefits of filing a return early can help reduce this peak of work, ensure your clients are on top of their tax position, and avoid penalties from HMRC for late filing or an overdue payment.

HMRC usually contacts tax agents and accountants to encourage taxpayers to file their returns well in advance of the 31 January deadline. Notifying your clients about the restricted access and extended waiting times to speak to an HMRC operator at peak times can focus their minds, particularly where their tax position has changed, or complex disclosures are needed.

However, there are other reasons why your clients should look to file their self-assessment tax returns earlier in the year, as shown below.

Filing a self-assessment tax return early does not mean payment is immediately due

By filing the annual return early, your client has more time to set aside funds to meet any liability or discuss any changes needed to their tax code with HMRC. They may also be able to set up a budget payment plan with HMRC to make regular weekly or monthly payments.

If a rebate is due because tax has been overpaid, the rebate is usually paid immediately into your client’s bank account, helping their cash flow. You may also be able to negotiate with HMRC to reduce your client’s payments on account if their future income changes.

Risk of fines and penalties is reduced

With immediate fines for late submission, and further penalties for failing to file or pay a liability, your clients will appreciate your call to action. HMRC can impose penalties of up to 100% of a tax liability if they believe a taxpayer is deliberately avoiding payment. HMRC can also estimate a tax liability if they conclude the filing of a return is unnecessarily delayed.

If your client cannot pay in full by 31 January, they may be able to set up a payment plan without speaking to anyone at HMRC, by using the online self-serve ‘Time to Pay’ facility. There are strict criteria to use this service and your client will still need to pay interest on any outstanding balance. Accountants should urge clients to pay any debt as quickly as possible, while making sure payments are affordable.

When a self-assessment tax return is filed it provides proof of income

If your clients are self-employed, they will often need proof of income when applying for a mortgage or loan. When a return is filed, your client can use the calculation as proof of income which will usually be accepted by most financial institutions. It also assists your client when applying for any government benefits or tax credits.

Accountants can reduce their workload in December and January

With accountants working flat out to support clients over the winter months, any action taken to bring forward work will provide significant gains. Many accountants use flexible pricing models to offer a reduced fee for self-assessment tax return work in the summer months and charge a premium for services in December and January. Clients welcome the opportunity to save some money and ensure their personal tax affairs are in order with an early submission, allowing them to focus on their own businesses.

Accountants with an excess of self-assessment work usually work long hours and weekends, paying staff overtime and weekend rates to address the peak of work they may have inadvertently created. The adverse impact on staff morale and profit margins can be significant, and the risk of operational failure and poor client service is increased.

If you find your workload remains excessive, outsourcing work to an offshore supplier can provide the additional capacity and expertise your Practice needs in the lead up to 31 January.

If you are an accountant looking to outsource services, increase margins and help your client’s thrive, you can book a video call with one of Initor Global’s expert advisors using this link or send an email to [email protected]

Initor Global is exhibiting at Accountex 2024 on 15th and 16th May. You can visit us at stand 1265.