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Preparing your self-assessment: now or last-minute

If you’ve already started thinking about your self-assessment, it’s safe to say that you’re likely well ahead of other sole traders and small business owners across the UK. It’s certainly not uncommon for this required filing to be put off until the deadline (January 31st for online returns and payment) is looming.

In fact, HMRC reported that in 2017, more than 50% of self-assessment tax returns were filed in the month of January. The day with (by far) the highest number of self-assessment returns filed? January 29th, with an impressive average of 21,386 per hour on that day alone. If you were one of these or if you expect to be this year, it’s worth setting some time aside to get on top of your self assessment.

When will you submit your self-assessment? Here's what you need to know about filing.

When you’re running a business, the day-to-day often requires your full attention and all of your time. Thinking about the accounting side and upcoming tax filing that is not within the next week is hardly foremost on your mind.

Whether this describes you or you are one of the few who manage to remain organised through all aspects of your business when it comes to finances and filings, keeping thorough records can make all the difference when it comes time to prepare your self-assessment return. This is especially true this year, as paying by credit card is no longer possible.

Do directors need to file a self-assessment?

The answer is: yes. If you are a director of a business, you must:

  • Adhere to the rules laid out in the company’s articles of association
  • Manage the records of the business and report any changes
  • File the company accounts and Company Tax Return
  • Pay Corporation Tax
  • Register and file a self-assessment return each year
  • Inform shareholders if you will benefit personally from a company transaction

There is some discussion around whether it is entirely necessary for salaried directors to register for self-assessment and file returns, but the clear answer is that it is required.

There have been legal cases of directors who failed to do so and faced a tribunal, with varying outcomes. No matter the reason, self-assessment registration and filing should not be overlooked by directors.

Working with an accountant on your self-assessment

From sole traders to directors of larger companies, opinions on self-assessment varies. Some believe that it is a personal expense, a commitment of time and effort put into growing a business, while others see it as purely a company expense.

In the case of a sole trader or company Director, typically there are only specific boxes that need to be filled. So when does the help of an accountant justify the cost? Or can you claim it?

If you're operating a business as a sole trader or company director its likely that the accountant cost of the self assessment will be a business expense and won't be considered a benefit in kind.

Avoid the hassle of your own calculations by working with an accountant on your self-assessment

However, there are circumstances in which this might not apply - for example if a business has particularly complex returns involving capital gains or if it is not considered a business, a fee can be added and must be paid personally.

Penalties for late self-assessments

There are arguably many good reasons for the late submission of a self-assessment. And of course, these reasons are acceptable excuses for not meeting your tax filing obligation. Included in this list:

  • The death of a close family member shortly before the filing or payment deadline
  • A personal health emergency that led to a hospital stay
  • Severe technical issues or malfunction (your computer broke down, for example)
  • HMRC online submission service issues
  • A natural disaster or theft
  • Unpredictable postal delays
  • A disability that prevents you from being able to file

It’s also possible to find yourself near the deadline without all of the necessary information needed to file exact returns. In this case, it is possible to submit estimates. These figures take the form of either:

  • Provisional: numbers supplied pending the submission of the final figures
  • Estimated: numbers supplied as the final figures if the individual/accountant does not believe it will be possible to provide accurate figures (for example, if the records have been lost). Box 20 must be ticked on page TR 6 of the return in the case of estimated figures.

If you’re unable to provide estimates and your reasons for filing late don’t fall into any of the above categories, it is likely that you will face penalties in the form of fees. In 2020, you will pay a 100 fee for returns up to 3 months late. This amount increases after 3 months.

HMRC provide an online calculator to help determine what kind of fees you will face for late filing of your self-assessment tax return.

Made a mistake on your self-assessment?

It’s not a pleasant experience, but it’s certainly not uncommon to realise that there is a mistake on your self-assessment after you’ve clicked the submit button. Not to worry. It’s possible to correct or amend a self-assessment for up to 12 months from January 31st until the end of the next tax year.

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