MTD: CIOT webinar explains how it should work

Rebecca Cave listened to the CIOT webinar on MTD, which provided some useful insights on how HMRC will apply the MTD for VAT regulations, and where the other aspects of the MTD project have got to.

The webinar was presented by Richard Wild and Margaret Curran of the CIOT technical team, alongside Adrian Rudd of PwC, who chairs the CIOT digitalisation and agent strategy working group. The CIOT team has amassed a huge pool of knowledge about MTD as they have been in close contact with HMRC at all stages of this project.

The webinar covered these areas of MTD:

  • VAT
  • Income Tax pilots
  • MTD for individuals
  • Tax agents
  • Companies and complex businesses

I have picked out some key points to report, but I recommend listening to the entire 90-minute webinar, which can be streamed for free, and rerun multiple times so you can share it with your staff.

VAT notice

HMRC is expected to issue its definitive guidance on MTD for VAT in the form of a VAT notice, in the very near future. This notice will set out how a business will be able to claim an exemption from MTD filing on the grounds of religious believes, insolvency procedure or not reasonably practical. Once HMRC has accept the business is exempt from MTD for VAT reporting, it should also be exempt from income tax reporting for MTD.

Who is drawn into MTD?

All VAT registered businesses with UK taxable turnover over the VAT registration threshold (currently £85,000) will be required to comply with the MTD recording keeping and reporting requirements for the VAT periods which begin on and after 1 April 2019. VAT periods will not be split, so if the VAT period ends on 30 April, the business will enter the MTD regime from 1 May 2019.

Where a business is VAT registered but has turnover under £85,000 at April 2019, it is not required to enter the MTD regime in April 2019. However, those businesses will have to monitor their turnover on a rolling 12-month basis, and if the turnover breaches the VAT registration threshold, the business will have to enter the MTD regime from the beginning of the next VAT period.

Once a business is within the MTD regime, it can’t opt out even if its turnover drops below £85,000. The only way out of the MTD for VAT regime will be to deregister for VAT.

Any business which registers for VAT on or after 1 April 2019 will be required to enter the MTD regime from the start of their first VAT period, unless the business has registered voluntarily, in which case MTD reporting will not be mandatory.

Charities with trading subsidiaries, and landlords who let VAT-opted property, will fall within the MTD regime on the same terms as other businesses.

VAT returns under MTD

HMRC is committed to supporting parallel means for voluntarily registered businesses to submit VAT returns, ie by way of the current online interactive VAT form, but only until April 2020. It is possible that all VAT registered businesses will be mandated into MTD for VAT from April 2020.

All VAT returns for businesses which are mandated into MTD will have to be submitted via MTD-compatible software which uses an API to transmit data to HMRC.

What to record

As a tax agent you will be permitted to maintain the digital records required for MTD on behalf of your clients. The digital records for the quarter need to be completed by the earlier of:

  • The due date of the VAT return
  • The date on which the VAT return is actually submitted

All VAT records need to be retained for six years, but HMRC won’t require the digital records to be held in the accounting software in which they were recorded. That data can be downloaded and retained in some other form.

The webinar went into some detail about what exactly will have to be digitally recorded for each transaction, as the MTD rules are more onerous than the current rules for recording sales and purchases for VAT purposes.

Retail business and those using certain special schemes won’t have to digitally record every transaction. Those relaxations from the VAT regulations will be set out in the forthcoming VAT Notice on MTD.

How data will be transferred

The webinar contained several examples of how the VAT data may be transferred to HMRC from the software or spreadsheet where it was recorded. These examples will be contained in the VAT notice in a similar form.

From April 2019 the relevant totals for the VAT return plus any voluntary supplementary data must be submitted to HMRC via an API from the MTD-compatible software.

However, HMRC realises that businesses use combinations of software and spreadsheets, so data needs to be transferred between these different elements. For the first year of MTD, those transfers between software or spreadsheets need not be made digitally, but from 2020 such transfers must be done via a digital link.

Manual adjustments to the VAT data will be permitted to the VAT account, say for partial exemption calculations. There will be more information on this in the VAT notice.

Software availability

There is a timing issue for software production as we are only nine months away from the go live date. Currently there are very small numbers of businesses and software companies testing MTD-compatible software in the MTD for VAT trial.

Richard Wilde commented that its going be a “very tight timetable” to get MTD software ready on time. Once the software products are adequately tested, the detail of how to obtains those products will be listed on HMRC pages of gov.uk.

Adrian Rudd commented that PwC are building API-enabled spreadsheets and other MTD software. PwC has made an offer that the API-enabled spreadsheets will be available free of charge to charities to use.

Penalties

A new penalty points system for MTD will be introduced, and the draft legislation to enable this is expected to be issued this summer.

During the first 12 months of the MTD regime HMRC will not generally impose penalties for non-compliance, but this soft-landing approach will only apply to businesses who make a real effort to comply. Those businesses who make no attempt to meet the MTD requirements should expect penalties to be imposed.

Publicising MTD

HMRC’s attitude to non-compliant businesses seems a bit unfair as it has made very little effort to communicate the changes to the business community at large.

The CIOT have been urging HMRC to start telling businesses that MTD is coming in 2019. HMRC is apparently developing a communication plan, but the CIOT have not seen a draft.

Income tax reporting

As for MTD for VAT there will be a de-minimus turnover limit for MTD income tax reporting, below which MTD reporting will be voluntary. This threshold is expected to be £10,000 for income tax, but as HMRC hasn’t confirmed this figure, it could be set at a higher level in regulations.

However, we do know the threshold will be set per taxpayer not per business, as for VAT. For example, an individual with £6,000 rental income and £6,000 of trading income will fall within the MTD income tax regime, as his total turnover of £12,000 will exceed the expected £10,000 minimum threshold.

Adrian Rudd said the quarterly reporting of the raw trading results to HMRC for income tax will serve no purpose other than prove to HMRC that the business is keeping digital records.

The quarterly data won’t be adjusted for tax matters such as disallowable deductions, or for accounting adjustments such as accruals, as those adjustments will be made in the final report for the year. As such the MTD quarterly reports can’t be “wrong”, and the figures will not be enquired into.

Each business (not taxpayer) will have to do an MTD return for income tax, whereas for VAT the reporting it will be per VAT registration. The reporting deadlines for income tax and VAT will be different and separate, even if the VAT quarters align with the accounting period, as the VAT reporting period has an extra seven days.

It is possible that MTD for income tax will be mandated as early as April 2020, but the CIOT expect this implementation date to be later.

Companies and complex businesses

Partnerships will not be within MTD for income tax if their turnover is greater than £10 million.

HMRC appears to have no settled policy on MTD for corporation tax. CIOT has been told that will be a formal consultation on MTD for corporation tax “later in Spring 2018”. In theory MTD for corporation tax could be mandated as early as 2020, but that seems unlikely.

 

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Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 June 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’.

The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2018 are:

Engine size Petrol
1400cc or less 11p
1401cc – 2000cc 14p
Over 2000cc 22p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 14p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 11p
Over 2000cc 13p

The guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

If you would like to discuss your car policy, please contact us.

Internet link: GOV.UK AFR

Entrepreneurs’ Relief is a capital gains tax relief available to those selling or giving away their business.

Entrepreneurs’ Relief reduced the amount of CGT paid on a disposal of qualifying business assets on or after 6 April 2008.

This relief will be available to:

Sole traders and partners selling or gifting the whole or part of their business
Company directors and employees holding at least 5% of ordinary shares and voting rights in a qualifying company who will share or gift all or part of their shareholding
In 2010, the relief changed to qualifying gains arising from 23 June 2010 being taxed at a flat rate of 10%, with the previous need to reduce the gain by 4/9ths being removed.

Conditions for relief

To claim relief, you have to satisfy a number of conditions through the qualifying period, which depend on the type of business disposal you’ve made.

Relief is available where there is either:

Material disposal of business assets
Disposal associated with a material disposal
Disposal of trust business assets
Disposal of a material asset

If the person is only selling part of a business, this part must be capable of being carried on as a going concern.

According to Tolley’s guidance, the disposal of assets which don’t constitute a sale of business capable of being carried on in its own right won’t qualify for the relief.

The definition of a material disposal depends on the type of asset sold:

In the case of a sale or gift of whole or part of a sole trade or partnership business, it must have been owned by the vendor throughout the year ending on the date of the disposal or cessation
It must have been owned by the taxpayer for one year prior to cessation and must be sold within three years of cessation
In the case of the sale or gift of shares or securities in a company, the disposal is material if throughout one year prior to the disposal of shares or date company ceased trading:

The company is a trading company
The company is the taxpayer’s personal company
The taxpayer is an officer or employee of the company or another company in the same group
Entrepreneurs’ Relief is only given in respect of relevant business assets, i.e. assets used for business purposes such as premises.

This means businesses can’t get relief for chargeable assets bought within the year, as long as they are brought into use in the business.

There is no relevant business assets requirement for the sale of shares or securities, meaning there is no need to prorate the relief in accordance with underlying investments held by the company.

Tolley advises using HMRC’s CGT for land and buildings toolkit when calculating the capital gain or loss on the disposal of land or buildings.

Definition of a trading company

According to Tolley Guidance, this is a company carrying on trading activities which does not include to a substantial extent activities other than trading activities.

HMRC says “substantial extent” means more than 20%. However, 20% of what?

Tolley says the test is applied to criteria such as:

Turnover
Asset base or balance sheet
Expenses
Directors’ time
CG64090

HMRC won’t apply the test if the company had a particularly poor trading period. Without this, according to Tolley, a company with seasonal trading fluctations, for example, might not be considered a trading company.

It’s suggested that the taxpayer might consider making a non-statutory business clearance application to HMRC for a trading status ruling, which would be separate to tax compliance from the shareholder.

Associated disposals

A disposal made after material disposal of business assets can qualify for Entrepreneurs’ Relief it it’s associated with it.

How it can be associated:

The individual makes a material disposal of the whole or part of their interest in a partnership or shares or securities in their personal trading company
The material disposal is made as part of the withdrawal of participation in the business
The asset sold after material disposal had been used in that business throughout one year ending with either the disposal or cessation of the partnership or company
Tolley said these conclusions flagged a few points, including:

The associated disposal rules don’t apply to sole traders
These rules don’t apply to isolated disposals of assets
The material disposal must happen first
HMRC says there should not be a significant interval between the material disposal and associated disposal.

Time-frames for associated disposal are:

Within one year of cessation
Within three years of cessation if the asset hasn’t been leased or used for any other purpose after the business ceased
Where the business hasn’t ceased, within there years of the material disposal provided the asset hasn’t been used for any purpose other than that of the business
There are also restrictions of relief on an associated disposal: If the asset is used in the business for only part of the ownership period, is only partly used in the business, or if the individual isn’t involved in the business throughout the period or if the asset was rented to the business.

How to claim and report Entrepreneurs’ Relief

It must be claimed by the first anniversary of the 31 January following the tax year of the disposal.

The gains are reported via usual channels on the CG summary supplementary pages in accordance with the type of asset sold. Calculations of the gains must be attached and submitted with the tax return.

The relief is claimed by crossing boxes 20, 26 and 34 based on the type of asset and including details in the white space on page CG2.

 

Entrepreneurs’ Relief

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Number of tax refund scams escalating

A sharp rise in the number of scam emails and text messages targeting taxpayers has been flagged by HMRC, with renewed warnings that criminals are attempting to trick the public into thinking they have received a tax rebate so they hand over their account and personal details.

 

The tax authority says the scams are timed to coincide with the period in which HMR is processing tax refunds after the end of the 2017- 2018 tax year.

Mel Stride, financial secretary to the Treasury, said: ‘HMRC only informs you about tax refunds through the post or through your pay via your employer. All emails, text messages, or voicemail messages saying you have a tax refund are a scam. Do not click on any links in these messages, and forward them to HMRC’s phishing email address and phone number.

‘We know that criminals will try and use events like the end of the financial year, the self-assessment deadline, and the issuing of tax refunds to target the public and attempt to get them to reveal their personal data. It is important to be alert to the danger.’

In March 2018 HMRC requested 2,672 phishing websites be taken down and received 84,549 phishing reports, and the tax authority warns that this kind of phishing is expected to continue in the coming months as genuine tax refunds are issued.

HMRC advises that income tax for 6 April 2017 to 5 April 2018 will be calculated over the coming months and anyone owed a genuine tax rebate will receive a tax calculation letter by post between June and October.

HMRC advises taxpayers to recognise the signs – genuine organisations like banks and HMRC will never contact anyone out of the blue to ask for their PIN, password or bank details.

It also advises people to stay safe by not giving out private information, replying to text messages, downloading attachments or clicking on links in emails they were not expecting.

Avoid and report internet scams and phishing advice

Genuine HMRC contact and recognising phishing emails guidance

 

How to make company car purchases cost effective

Tax and NI charges can make company cars expensive. However, if you use your business to run a car for a family member, say a son or daughter, there are steps you can take to make it cheaper than personal ownership. What are they?

Expensive but still cost effective

In April 2018 the tax and NI charges for company cars crept up again. While the maximum charge didn’t increase, the CO2emissions bands moved so that the majority of company car drivers will pay more in 2018/19 and in 2017/18 for the same car. Despite this, financing a car through your company can be more cost effective than doing it personally. This is something to keep in mind if your spouse, son or daughter needs a new set of wheels.

Example. Peter is a director shareholder of Acom Ltd. He is a higher rate taxpayer. His daughter Katy needs a car and Peter agrees to fund the purchase. His budget is £13,000. To keep annual costs down Katy picks one with CO2 emissions of under 95g/km. Katy will pay the running costs, e.g. insurance, servicing, etc. How do personal and company ownership stack up against each other?

Katy as owner. The idea is for Katy to keep the car after four years and buy a replacement herself. At that time its expected value is £4,750. This means the net cost to him is £8,250 (£13,000 – £4,750). He takes extra dividends of £12,222 from Acom to cover this, which after tax at 32.5% leaves £8,250.

Acom as owner. The cost over the four years to Acom would also be £8,250, but it receives corporation tax (CT) relief at 19%, which makes the net cost to it £6,683. Peter must pay tax on the company car of £988 per year. He takes dividends each year of £1,464 to cover the tax bill. That’s £5,856 over four years. After 32.5% tax that’s £3,952. Acom has to pay Class 1A NI on the car benefit, which after CT relief is £1,104. The total cost to Acom for the car is £13,643 (£6,683 + £5,856 + £1,104). The calculations indicate that personal ownership by Katy is the cheaper option, but that’s not the full story.

Reimbursed costs

If Acom (and not Katy) pays the running costs and Peter reimburses Acom, and Katy reimburses him, this reduces the tax and NI payable on the company car option. This can tip the balance in favour of Acom owning the car.

Tip. For the reimbursed expenses to reduce the tax and NI, Acom must make it a condition of it providing the car. This should be put in writing in case HMRC asks questions.

Less tax and NI. Assume the average annual cost of insurance, road tax, servicing etc. is £1,700. If Acom pays this and requires Peter to reimburse it, the corresponding amount on which he is taxed for the car is reduced by the same amount. Over the four years of ownership that’s a tax saving of £2,720. Therefore, Peter needs correspondingly fewer dividends from Acom to cover the cost. Acom also saves money. Katy’s financial position is neutral, it’s just that she reimburses Peter for the running costs instead of paying them direct.

Tax saving makes the difference. In our example, the tax savings achieved by simply changing how the running costs are managed is over £4,500 (see The next step ). This makes company ownership significantly the cheaper option.

If your company buys the car and pays the running costs, but the family member reimburses it the latter, the usual company car tax and NI is reduced. The savings mean that overall company ownership can be cheaper than the family member buying the car themselves by up to several thousand pounds.

Annual accounting – how to make it work for you

A business associate says that his firm uses VAT annual accounting to help with its cash flow. What are the conditions for joining the scheme and can it offer you the same cash-flow advantages?

Annual accounting

As the name suggests, VAT annual accounting is an HMRC scheme that allows you to submit a single VAT return each year instead of the usual four. That alone makes the scheme attractive, but it also means you pay fixed VAT payments plus an annual balancing payment. Monthly payments are the norm, but you can ask HMRC to go quarterly.

Choose your date carefully

The annual accounting scheme rules allow you to choose the starting point for your annual return. Picking the right date to suit your business can give you a cash-flow advantage.

Tip. If your trade is seasonal, choosing an annual return period that starts at the beginning of the seasonal boom gives you the best result.

Example. Bill and Ben own three restaurants in seaside towns. 75% of their £800,000 (excluding VAT) annual turnover occurs in July to September. Before annual accounting they made VAT returns for calendar quarters meaning that £120,000 of their annual VAT was payable at the end of October each year, while the remaining £40,000 was spread over the other three VAT quarters.

They applied for an annual accounting year starting on 1 July. This meant their VAT bill in October was just £40,000 which allows them to hang on to the difference of £80,000 (£120,000 -£40,000) an extra three to nine months.

The annual return and payment

When you’re in the scheme your monthly or quarterly payments are based on your VAT bill for the previous twelve months. This means if your turnover is growing you gain another cash-flow advantage.

Example. In the first year of using the scheme Bill and Ben’s turnover increased so that their annual VAT bill rose to £200,000. However, their first three quarterly payments in the second year remain at £40,000. Of course, they must pay the difference and this is due one month after making their annual return, which must be submitted by 31 July. Their VAT payments for their third year in the scheme are based on their second year and so are £50,000 per quarter.

Beware a reducing VAT bill

If the VAT payable for a year is less than the previous one, say because of falling turnover or increased purchases, your fixed payments under the annual accounting scheme will exceed your actual liability. If you think that’s going to happen you can apply to HMRC to reduce your payments.

Joining the scheme

You can apply to HMRC to use the annual accounting scheme if you expect to make VATable supplies of up to £1,350,000 (excluding VAT) in the next twelve months (see The next step ). But you can’t apply if you’re registered for VAT as part of a group, have stopped using annual accounting in the previous twelve months or owe VAT which is overdue.

Your expected VATable supplies over the next twelve months must not be estimated at more than £1,350,000 (excluding VAT) and your business must not be part of a VAT group registration. You can usually gain a cash-flow advantage if your business income is growing or is seasonal.

Self-Assessment tax return: less fuss if you file early

We know that just the words ‘self-assessment tax return’ uttered in succession can induce feelings of trepidation in those required to file one. This often leads to a reluctance to tackle the task at hand, head-on.

Though the 31st January deadline remains a constant in the tax calendar, procrastination still sees thousands of taxpayers filing their return at the last minute, year in and year out.

As the festive period comes and goes, they watch the days in January tick past until their time is almost up and they eventually conclude that they can’t avoid the inevitable any longer.

If this sounds familiar, revel only briefly in the fact that you are not alone. In January 2018, 2.6 million people had still not filed their return by the 29th January. Over 6% of all returns due were filed in the final 24-hour window – yet, some 745,588 people still missed the deadline completely.

The truth of the matter is, it’s far better to file early than to risk finding yourself in tax-related trouble.

It’s all in the timing…

“Time is what we want most, but what we use worst.”
― William Penn

Preparation and submission of your self-assessment tax return takes time; whether it’s registering for self-assessment (if it’s your first time), sourcing and assembling all the necessary documentation or prospective tax planning.

Be aware of how much of it you have at your disposal and, more importantly, use it wisely. Doing so will undoubtedly give rise to a better outcome than if you find yourself still agonising over the details fifteen minutes before the deadline.

Procrastination = penalties

“You may delay, but time will not.”
― Benjamin Franklin

No matter how long you spend procrastinating, the self-assessment tax return deadline will still arrive at midnight on 31st January 2019, as it supposed to. If, by this time, you have not filed your return, you will unfortunately incur penalties.

The initial penalty for failing to meet the 31st January deadline is £100. After this point, the penalties increase steadily depending on the amount of time that has passed since the deadline.

If HMRC believe you are deliberately neglecting your responsibilities, you may be liable for a fine amounting to 100% of the tax owed.

It’s less fuss if you file early…

“Better three hours too soon than one minute too late.”
― William Shakespeare

Take Shakespeare’s advice and get the ball rolling sooner rather than later. Taking your time, whilst time is on your side, and filing ahead of the deadline can eliminate the frantic fussing and fretting you might otherwise experience if you leave it too late.

Aside from the obvious advantages of being proactive and filing ahead of the deadline, such as avoiding penalties, improved tax planning, time to prepare thoroughly and the ability to budget, it can also give you peace of mind. This can be particularly beneficial during the festive period which, for some businesses, can be their busiest time.

What happens if… I leave my self-assessment tax return until the last minute?

No matter when they are uttered, the words ‘self-assessment tax return’ can often induce feelings of fear and unease in those required to file one. This lack of enthusiasm then often leads to a lot of ‘foot-dragging’.

Though the 31st January deadline remains a constant in the tax calendar, procrastination still sees thousands of taxpayers cutting it fine every year. As Christmas comes and goes, they watch the days in January tick past until their time is almost up and they realise that they can’t avoid the inevitable any longer.

If this sounds familiar, revel only briefly in the fact that you are not alone. In January 2018, 2.6 million people had still not filed their return by the 29th January. Over 6% of all returns due were filed in the final 24-hour window – yet, some 745,588 people still missed the deadline completely.[1]

The truth of the matter is, it’s far better to file early than to risk finding yourself in tax-related trouble. If you still need convincing, then read on…

To file or not to file: How do I know if I’m eligible?

You will need to file a tax return if, in the last tax year:

  • your income from self-employment was more than £1,000
  • you received more than £2,500 from renting out property
  • you received more than £2,500 in other untaxed income
  • your income from savings or investments was £10,000 or more before tax
  • your income from dividends from shares was £10,000 or more before tax
  • you made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
  • you were a company director – unless it was for a non-profit organisation and you did not get any pay or benefits (e.g. company car)
  • your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
  • you had taxable income from abroad or if you lived abroad and had a UK income
  • your taxable income exceeded £100,000
  • you were a trustee of a trust or registered pension scheme
  • you had a P800 from HMRC saying you did not pay enough tax last year – and you did not pay what you owe through your tax code or with a voluntary payment
  • your State Pension was more than your Personal Allowance and was your only source of income – unless you started getting your pension on or after 6 April 2016

A comprehensive list of eligibility criteria can be found on the Government website here. HMRC will contact you if they deem that you need to file a tax return; if they haven’t and you think you may be eligible, you should contact them at the earliest opportunity. Likewise, if HMRC have asked you to file a return but you don’t think it applies to you, you should notify them as soon as possible.

Time is of the essence

Preparing your tax return takes time and so you need to ensure that you allow yourself plenty of it.

The first thing to consider is whether you are already registered for self-assessment. If you haven’t filed a return before today, the likelihood is that you will need to register – a process that can take up to two weeks, if not longer.

Once this is done and dusted, the next challenge you face is gathering together all the paperwork required to prepare your tax return; from P45’s, P60’s and P11D’s to expenses, invoices and bank statements. Being organised and keeping your documents in an orderly fashion will drastically reduce the risk of potentially disastrous oversights.

Not only this, but your accountant, if you have one, will need you to hand over all the appropriate documents to accurately complete and submit the return on your behalf before the deadline, so it pays to make sure paperwork isn’t mislaid.

Getting the ball rolling sooner rather than later can also give you the perfect opportunity to budget for your tax bill. It’s as simple as it sounds; if you file six months early, it follows that you have six months to save if you need to.

If all of this isn’t enough to get you motivated, then consider how much nicer Christmas will be without the dreaded 31stJanuary deadline looming over you.

Guilty of procrastinating? You’ll pay for it…

Filing well in advance of the deadline means you have more time to address any issues that do arise and avoid any nasty penalties. For those who aren’t familiar with HMRCs penalties, they are as follows:

  • A £100 fine if you miss the January 31st deadline;
  • £10-per-day fines (for up to 90 days) if you still have not filed by 30th April;
  • whichever is the greater of £300 or 5% of the tax that you owe if you haven’t filed after another 90 days;
  • another £300 or 5% of the tax owed if you still haven’t filed within a year;
  • additional penalties – including up to 100% of owed tax – if HMRC believes you are purposely putting off the filing of your return.

Working close to the deadline also means you have less time to identify any opportunities to compliantly reduce your tax liabilities, meaning you could end up paying more than you need to. Tax returns are as much about effective planning as they are compliance.

The danger of going it alone

The DIY approach to self-assessment tax returns comes with a whole host of potential ‘dangers’ and under all but the simplest of circumstances is best avoided.

When juggling the preparation of your tax return and the day-to-day running of your business, it can be all too easy to miss important details and make costly mistakes. You may also find that you fall into the trap of evaluating your tax affairs purely in terms of the ‘here and now’ and as a result fail to protect your best interests.

You might argue that with so much online guidance available, you would be hard pushed to put a foot wrong – but this is not the case. The content that your search engine returns, for the most part, is designed to appeal to a very ‘standard’ set of circumstances, which your own may not align with.

Is it worth the panic, puzzlement and potential miscalculations?

Silly mistakes can make HMRC suspicious

If you submit your tax return on time, by the skin of your teeth, but it contains errors or anomalies as a result, then that may attract the attention of HMRC. This could prompt HMRC to launch a tax investigation, which can be a lengthy and expensive process.

Work with us = less fuss

As we’ve said already, preparing and filing your tax return takes time; time that would be better spent on running your business. Not only this, but in the absence of expert knowledge and years of experience you run the risk of making costly errors that will ultimately cause delays and leave you feeling unnecessarily stressed. Seeking online help may seem like the obvious answer, but the information is likely to be inadequate.