Member Article

Self-assessments: Best to act early

The annual self-assessment deadlines are again creeping around the corner. Although many people will be looking towards 31 January for submitting their online tax returns to HMRC or indeed for paying off any tax for the previous year, this is accelerated forward to 30 December for anyone wishing HMRC to automatically collect taxes owed from their wages and pension.

As many small business owners and employees will pay tax through PAYE, for example via receiving a company pension, it is going to feel that the daunting process of self-assessment must restart for some self-employed people and company directors throughout the UK. Not least, they will have questions over whether they have the time, motivation, or expertise necessary to sort their accounts themselves, or bring in help from an accountant or financial adviser to help complete the complex forms.

Considering bookkeeper support

If you’ve not got the luxury of someone already in place to help out, you may prefer to turn to a licenced bookkeeper rather than an accountant, who can efficiently process your finances for HMRC, often at a better price.

Bookkeeping can help ensure that your financial records and that of your business are well organised and up-to-date, making assessments much easier to complete. A licenced bookkeeper can offer services including bookkeeping, financial accounts and accounts preparation for sole traders, VAT and computerised accountancy systems. Bookkeepers will also know exactly what information you will need for your returns – including self-assessments and regular VAT returns – and will be able to do the thorough checks needed to avoid any errors being submitted, which could otherwise lead to investigations from HMRC.

You can find qualified accountants or bookkeepers in your area here, or if you’re brave enough and time allows, there are many qualifications available that can set you on your own path to having the technical know-how needed to help complete the information required.

Having an adequate bookkeeping system in place yourself, or appointing a bookkeeper to do this for you if you don’t have the time yourself, will make life much easier for not only your self-assessment forms but also helping with other financial reports, allowing you to consider budgeting requirements for the future. In addition, small businesses will therefore know what suppliers are owed or owe payments, and keep track of their previous accounting records – which they are required to do for a minimum of six years.

The move to digital

The upcoming deadline is only for those wanting to notify HMRC via their online systems – indeed the paper returns deadline of 31 October has already passed. And this provides another reason to act now if you haven’t previously needed to fill out tax returns – HMRC need a certain number of days to provide you with an activation code in order to log on to your personal system, meaning you can’t just fill everything out at the last minute. So don’t wait until December or January – start sorting out your returns now.

In the future, it is hoped, the planned introduction of the Making Tax Digital (MTD) scheme from HMRC should create an environment in which tax reporting becomes far more straightforward for individuals and businesses alike. MTD aims to make the UK’s tax system both more efficient and effective, while facilitating people paying the right tax at the right time. This could lead to quarterly reporting for some, although landlords and the self-employed whose annual incomes are below £10,000 are expected to be exempt. In any case, the more your receipts and invoices are kept in order and up-to-date, the easier your reporting will ultimately be.

While MTD will create a simpler and more aligned system, we are going to need to sit tight for a while longer until it can be fully rolled out.

Rob Alder is Head of Business Development at AAT

This was posted in Bdaily's Members' News section by AAT (Association of Accounting Technicians) .