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Rely on a professional to do your taxes, experts say

Contractors and small business owners should strongly consider relying upon the expertise of a professional accountant when it comes ime to prepare tax returns, experts say, especially in light of the constantly changing tax landscape.

Issues of case law and new finance bills change the way taxes are collected in the UK on almost a yearly basis, yet many freelancers and small business managers doggedly plug away at their taxes, losing sleep and pulling their hair out instead of simply outsourcing the work to a professional. The costs of using an accountant are dwarfed in the long run, when you take into account the costs you could incur in making a mistake in reporting your earnings to Her Majesty’s Revenue and Customs, which makes the few hundred pounds you spend on an accountant a bargain.

One of the most important ways an accountant can help a contractor is being able to navigate the tricky waters of IR35 rules, especially with HMRC’s new ‘disguised employment’ guidelines actually muddying these waters even more than before. IR35 is currently much more complex than it needs to be, considering how it’s essentially to weed out ‘freelancers’ who quit their job one week and are then re-employed in their same position the next with the only difference being that they are contracting through a third party – but the particularities can be mind-boggling for someone who simply wants to strike out on their own as a contract worker.

If HMRC selects a contractor for an IR35 investigation – based upon a tax return submitted without the aid of an accountant – this could be an expensive endeavour, as the costs the contractor could incur in providing evidence to the contrary could cost thousands more than it would have to simply hire an accountant in the first place!

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