Some freelancers may find it beneficial to consult a contractor accountant over the next few days in order to make sure their tax return is in order.

For the 25% of self-assessed taxpayers who still complete paper tax returns, the filing deadline grows ever nearer. Anyone whose return arrives after midnight on 31st October could be subject to a £100 penalty, the Revenue has warned.

There are around 9 million self-assessed taxpayers in the UK and 75% of them file online at the end of January. HMRC prefers this method of submission because it reduces the man hours spent trawling through thousands of pieces of paper.

Online filing has benefits for the taxpayer as well. Your tax is calculated automatically; you receive an acknowledgement when you’ve submitted your return; and it’s processed faster, meaning that if you’ve made an overpayment of tax, you’ll be repaid more quickly.

The taxman said there is still time to make the transition from paper to online filing by going to HMRC’s website and select “Register (new users)”.

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The deadline for online VAT returns is drawing close. As from April 1st this year, it becomes mandatory to file online.

Businesses that do not comply with the new online regulations will face a fine from HMRC.

The Federation of Private Businesses believes there are many benefits to using the online service. These include 24/7 access and an instant acknowledgement of receipt. An initial online error check is performed; businesses can obtain a seven-day return and extension and use the system to nominate an agent or online accountant.

The only disadvantage, according to many contractor accountants, is that direct payment must be made electronically through the BACS system, CHAPS, Bank Giro and internet or telephone banking.

Another change that comes into effect on April 1st this year concerns the receipt of cheques. If paying VAT by cheque, the payment is classed as made when the cheque clears as opposed to when it was received.

Businesses are strongly advised to urgently review their VAT procedures, including contractors using the Flat Rate VAT Scheme, to ensure they comply with the new regulations.

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