If there are two terms likely to induce a deep sigh and/or a slumping of shoulders, it’s HM Revenue & Customs (HMRC) and Self-Assessment Tax Return (SATR). And not without good reason.
Good news: not everyone needs to complete a SATR.
Bad news: for those who do, it’s sometimes not straight forward and there are penalties if you fail to submit your SATR on time, or if HMRC take the view that not enough care has been taken in completing it.
Good news: if you make a mistake on your SATR you’ve normally got 12 months from January 31st after the end of the tax year to correct it. This is called an amendment. For example, for the 2015-16 return you have until 31 January 2018 to make an amendment.
But what form could these mistakes take?
- Signature & date missing
To avoid this simple schoolboy error before you start, stick a post-it on the front reminding you to sign and date box 22.
- Incorrect National Insurance number and/or Unique Taxpayer Reference (UTR)
Life throws a lot of codes and references at us, and which is which can sometimes be confusing. The UTR is a ten digit reference number. It is unique to you, and you will find it on every correspondence you receive from HMRC. Your National Insurance number is also unique to you. It is made up of numbers and letters, and you will find it on payslips or on a P60. Be sure to be accurate when including this information.
- Ticking the wrong boxes
The paperwork sent by HMRC includes a guide to completing your Tax Return. It’s very clear and takes you through the process step by step.
- Mañana form-filling
Notes such as Info to follow or As per accounts will not be accepted by HMRC. A SATR with these types of notes is not a completed document and will not allow you to avoid the penalties HMRC can impose.
- Sloppy arithmetic
At the very least, double check your calculations. It’s important to be accurate.
- Failing to declare all income/Capital Gains
Failure to declare all relevant income and Capital Gains can result in severe penalties. If those errors are deliberate (for example: omitting a source of income) you could be prosecuted.
- Forgetting supplementary pages
If you have additional income, you will need to include supplementary pages. This additional income may come from playing in a band at weekends, or perhaps your erotic fan-fiction has become a best-seller, or it could be from investments, property, shares etc. Make sure you include all additional income on the supplementary pages.
- Claiming the unclaimable
There may be things you assume can be claimed, but in fact can’t. Check with your accountant as there are costly penalties for incorrect claims; and besides, there may be things you hadn’t thought of that can be claimed.
- Missing the deadlines
Don’t leave things to the last minute. The deadline for submitting a paper SATR is 31 October following the end of the tax year. The deadline for submitting a SATR online is 31 January after the end of the tax year. If you miss these deadlines, there are penalties to pay.
- Don’t shoe-box your records
The easiest way to ensure completing your SATR is stress-free is to be organised about keeping proper and complete records. The paperwork you will need (where relevant) includes:
- P60, P45 and P11D
- Expense records
- Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance
- Pension records
- Bank statements
- Property income
- Foreign income including evidence of tax already paid abroad
- Capital gains
- Employee share schemes
- Student loan payments
If you are self-employed you will need:
- Cash books
- Mileage records
- Bank statements
- Records of all sales and takings, purchases and expenses
- Money taken out of business for personal use (if any)
- Personal money put in to the business (if any)
It’s perfectly possible to complete a Self-Assessment Tax Return without the help of a qualified accountant or tax advisor, but hiring a professional will ease your workload and offer comfort that the submitted forms are accurate and complete.
By Carol Cheesman, Principal of Cheesmans Accountants