We’re told regularly that “tax doesn’t have to be taxing”. It’s become something of a catchphrase for HM Revenue and Customs (HMRC), with the message appearing on billboards, in newspapers and on television ahead of the end of the tax year.
But what does it really mean? I don’t know about you, but tax is something that’s always struck me as being extremely complex and the fear of getting something wrong and facing investigation from HMRC has led me to utilise the services of a professional company to complete my tax return (click here to find out more).
Many contractors may hire an accountant, especially those operating as a limited company. Personally, I’ve never really felt the need to pay someone a monthly fee to look after my books, but the annual tax return is a step beyond what I feel comfortable with for a few reasons:
It can take a long time
Going through the assessment form is an extremely time-consuming process, even before you begin to attempt the plethora of sums required to fill it in. It’s quite common for it to take a couple of days or even longer to adequately complete it and for a lot of contractors, this is time you simply cannot afford to give up.
If you structure your assignments so that you work five days each week, it can take the other two just to get the assessment something close to finished. This means you’ve effectively worked seven days without a break, which coupled with the stress of the form itself can be a significant undertaking.
Furthermore, if it eats into your normal working week, limited company contractors may need to take two or three days off to complete it – during which time you are unlikely to be earning anything.
Unless you are a qualified accountant yourself, you are unlikely to be aware of the additional financial gains that can be made as part of the process. Taking counsel from a qualified accountant on important matters (such as federal-tax-resolution-free-tax-consultation) can prove to be helpful, especially if you are running on a tight budget.
For example, if you work from home, did you know it is perfectly acceptable to claim back a portion of your utility bills? I didn’t, but this is something a professional will point out to you.
They’ll also know if there’s something you’re claiming for that you are not entitled to. If you make an error during the tax return that works out to be financially favorable for you, HMRC are likely to launch an investigation, whereby you could face significant fines in addition to the recouping of unpaid charges.
HMRC requires supporting documentation for every aspect included in your tax return. Although these records do not have to be held on paper – they can be stored digitally or part of a book-keeping software package – the taxman can ask to see them for up to a year after the deadline for completing your assessment.
If you are unable to produce accurate, complete and readable records, you may face a penalty from HMRC. This is where a professional can come in handy, as most will store the documents on your behalf, ensuring they are available if and when HMRC requests to see them. However, even if you have made a mistake in your tax returns, there is nothing to be fearful of! You can still amend your mistakes with the help of a professional accounting firm like Porte Brown (visit this website here to know more). This would ensure that you can rest easy during your tax filing days and not panic even if you have made an error.
All in all, while it is definitely possible to complete your personal tax return yourself, I’ll continue to exercise caution and leave it to the professionals – I know my strengths lie in contracting, rather than accounting.