Tag Archive | "self assessment"

Remember…Remember…The 5th of October

Write this date on your calender folks…the 5th of October. Why? Because it’s the deadline for 2017/2018 Self Assessment.

That’s right. If you are planning to submit a self assessment for the first time then it MUST be done by the 5th of October 2018. No excuses.

HMRC have just sent out a press release reminding all of you first timers to get your skates on. At the time of writing, you only have 10 days to visit the official HMRC website and get signed up. The clock is ticking.

Once you do sign up then you are all set and are free to complete your tax return for the 2017/2018 tax year and then send it in by the 31st January 2019 deadline.

If this is your first time then it might all seem a bit confusing, but trust me, it really isn’t. Especially if you have a contractor accountant on your side.

That would be my advice anyway. Hire a contractor accountant…even if you are not a contractor.

Forget about those general accountants. Most of them don’t know their elbow from their ankle.

A contractor accountant, on the other hand, is the perfect choice for someone doing self assessment for the first time.

They will do most of the heavy lifting for you. Which means all you have to do is lie back and think of England…or Scotland..or Wales…or even Northern Ireland. Anywhere in the UK basically.

Not sure if you should be doing self assessment? Then you need to get yourself to the Self Assessment page on the HMRC official website. You can access that page on your home computer, laptop, tablet or smartphone. 24 hours a day, 7 days a week. So there really is no excuses for not checking.

HMRC have also prepared some high quality content to help you through the self assessment process. You can find webchats, webinars, YouTube videos and social media posts across their network. So make sure you check it all out.

Here at Contractor Accountants we know a thing or two about high quality content. Just take a look through our weekly blog posts and you will see what I mean.

If you are just beginning your self employment journey then I would suggest checking in here at Contractor Accountants on a weekly basis…even if you are not a contractor.

Sure, we specialise in blog posts for contractors, but we also welcome freelancers, small business owners, gig workers…everybody!

Even if you are not self employed, but just thinking about becoming your own boss, then reading our blog posts on a weekly basis is 10 minutes well spent if you ask me.

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“YOU LIE!” – 60% of Self Employed Under-Reporting Tax

Filling in a tax return and sending it off to HMRC is a legal obligation, just make sure you tell the whole truth and nothing but the truth.

This comes on the back of a new study that quite clearly shows that 60% of our nations self employed under-report the amount of tax they owe.

Are they doing this intentionally? In my opinion, most are not, but that doesn’t change the fact that any inspector will instantly assumed you lied on purpose. This spells one word and one word only…trouble.

That last thing you want is to be investigated by the HMRC because of some mistake on your tax return. You want to be focused on your business, and not up in the dock facing a jury of your peers.

The study is based on analysis of approximately 35,000 audits of tax returns that were chosen at random and carried out by HMRC between the years of 1999 and 2009.

Perhaps online digital tax returns are making things easier for self employed people? That could be true, and many pundits were predicting that quarterly tax returns online could make things even easier. Unfortunately, it seems that the sending in a tax return 4 times a year idea has been scrapped.

The vast majority of tax under-reporting is believed to be under £1000, although the study did mention that around 4% was over £10,000, which of course, is the kind of amount that HMRC are not going to be too pleased about.

Where are the worst self employed offenders? It appears that construction, hospitality and transport sectors have the most, with bed and breakfast owners and taxi drivers being right at the top of the list.

The professor behind the study had this to say: “Between errors and deliberate under-reporting, a significant share of self assessment tax goes unpaid.”

If you ask me, a lot of this could be avoided by hiring an accountant to take care of everything for you.

Many self employed business owners, freelancers and contractors think they are doing everything right when doing their self assessment, but are actually making unintentional mistakes that could jeopardize their business

That is why I advise every single self employed person in the UK to find yourself a good accountant. Don’t assume you are not one of the people under-reporting your tax.

You don’t know until someone trained and experienced goes over your tax form…that person is a qualified accountant, and they make it their number 1 priority to make sure you stay on the right side of HMRC.

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1 Million Are Innocent, But Still Chased Over LTR

LTR, or late tax returns for those of you who don’t know…well, it has just emerged that around 1 million have been WRONGFULLY accused of being late.

Late sending those tax returns in according to the HMRC, which then led them to fine each of these people hundreds of pounds.

The exact figure wrongfully accused of LTR is 963,000 which is not that far away from a million, and no doubt resulted in a lot of people wondering exactly what was going on.

What appeared to be happening is that many of these million were unnecessarily registered for SA, or self assessment for those of you not down with the lingo. The HMRC no doubt were about to shout bingo, although once the truth came out it wasn’t what they expected at all.

Of course, if you are unnecessarily registered for SA, then filing a tax return won’t be something you even think about, especially if you are unaware of the fact HMRC are expecting a form from you in the post. I’m sure many these people were surprised to get a LTR payment demand in the post.

As we’ve heard right here on this very blog, HMRC don’t mess around when it comes to getting money they are owed, and it even sometimes results in debt collection agencies being called in to recover the money. Not something you want to happen is it? It does though, unfortunately.

It seems that many of these “rogue” people in the governments system had not filed tax returns for 3 years or more and were no longer self employed. Perhaps many of them were former contractors, freelancers and small business owners? I’m sure they were. Many of them retired, no doubt.

Anyway, the HMRC are “in the know” with what is going on here, and so far have taken 200,000 of the 1 million out of their system and wiped clean the slate in regards to LTR fines and what not.

I’m sure this will all get sorted out quickly, and that no more innocent people will have to pay fines or do some time, so to speak. With the advent of digital tax systems on the government websites, it should stop this kind of thing in its tracks.

What I will say, is that every contractor and freelancer out there who is registered for SA and does have the possibility of a LTR just around the corner if they don’t make the deadline, then what you need to do is find yourself a decent contractor accountant who can handle all of this for you.

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500,000 firms sign up for HMRC’s Your Tax Account service

More than one half million businesses have flocked to the new Your Tax Account service launched by Her Majesty’s Revenue & Customs just a few days ago.

Talk about a runaway success: more than 500,000 businesses have taken up the taxman’s new online tax account since its 27 December debut, a service that began its pilot programme in May of this year. The initiative is specifically geared towards small firms, including freelance workers and contractors, in order to provide them with all the knowledge they need in order to manage their taxes properly.

With sole traders responsible for their own tax affairs in a whole different way than employees are, the new programme offers some much needed help for any small business enterprise. The fact that it’s online makes it eminently accessible as well, as finding time to go down to a physical brick-and-mortar storefront whilst you’re trying to manage the intricacies of your business is like pulling teeth. But with the Your Tax Account homepage being customisable in ways that will certainly make your head spin, it’s likely to be just the thing for the busy contractor that needs help with things like VAT, PAYE, corporation tax, or self assessment tax forms just to say the least. Of course, that’s just what the web portal has at first. HMRC says that it’s a work in progress though, and that means there’ll be even more services that will be added over time.

Honestly I can’t think of anything better than this when it comes to Government support for SMEs and particularly contractors. Not to say that any freelancer wouldn’t benefit from a good contractor accountant, but sometimes that’s just not possible, either because of cashflow issues or simply a lack of time. The new guided webpage is a fantastic way to get some directed help when it comes to handling your tax burdens before they come back to bite you on the arse, and with HMRC cracking down on both accidental and purposeful tax issues it’s incredibly important right now to make sure you get everything right the first time so you don’t have to worry about a visit from the taxman with a long list of grievances against you.

I can only hope that HMRC continues to add more and increasingly useful tools to their new Your Tax Account service in the future!


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Fully paperless Self Assessment returns loom in future

The taxman has taken the next step in achieving its ultimate goal of running before it can walk by making it impossible to submit a paper self-assessment.

Everyone loves to have a go at Her Majesty’s Revenue and Customs. Truth be told, I’m not innocent when it comes to running down the tax authority for its hare-brained schemes, but the thing is that HMRC makes itself a target as a result of its massively stupid behaviour. The newest example of this idiocy, the push towards completely paperless self assessment tax returns is getting closer to fruition thanks to a newly launched consultation proposal.

Listen, I know HMRC is keen to save as many little pennies as it can, but I don’t know if eliminating paper waste is really going to make much of a difference. Yes, without the need to send countless little bits of correspondence through the post it will be faster and more efficient, I’ll give you that – but at what price? Not every Brit is as technologically adept at even simple things like checking their e-mail. Not only that, but can’t electronic communications be intercepted? It’s hard to tamper with a letter sent by post, but something tells me that the security of the financial details of the average person submitting self-assessment return might be less secure whilst being transmitted over the world’s most diverse electronic data transfer network.

I can only hope that this push towards digital, all-online and paperless tax returns isn’t going to make it impossible to submit a tax return the old-fashioned way, if nothing else but to ensure that Brits without reliable internet access can still take care of their tax business. All too often do small minorities of the British taxpaying population fall through the cracks between the way it’s always been and new, supposedly more efficient and time-saving methods of doing things. There’s still shedloads of people around paying taxes that were born far, far before the idea of the internet was even a twinkle in the eye of the programmers and engineers that brought it to life, and to ignore these people in the name of ‘progress’ is the height of arrogance, if you ask me. So let’s just cross our fingers and hope that the taxman doesn’t end up shooting itself in the foot in its zeal to join the 21st century.

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You’re up against the deadline, contractors!

Well, this is it, lads;  today is your deadline for your latest Self Assessment return payment on account. Miss it at your own expense!

If you’re a contractor and you don’t want to end up paying any interest on your debt to Her Majesty’s Revenue & Customs, you’d better get your payment in before the end of the day. Remember, the self-employed have to pay your estimated tax payment across the course of the year since they don’t have any tax deducted with a pay cheque, like a traditional worker.

This is the last instalment due, so if you’re already lagging behind and you missed the 31 January deadline, you’re already going to end up paying through the nose. Miss this one and you’re going to be in a world of hurt when the taxman comes knocking.

Just 30 days and you’re charged a 5 per cent penalty on top of what you owe. Six months down the line and that goes up by another five per cent – and that’s piled atop your existing balance; another six months and you’ve got yet another five per cent, all while your interest keeps ticking up on the full amount.

And don’t think that you’re off the hook if you haven’t received a reminder letter in the post, which were sent out late last month and early in July. You’re absolutely liable for the tax you owe; yes I know it’s a pain in the arse to deal with, especially when you watch all these big multinationals pay only a fraction of what they owe to the taxman, but you’re not Amazon and HMRC is going to squeeze every last rock until it bleeds – and the smaller rocks turn out to be a lot easier to squeeze than the larger ones.

Still, think of the bright side here: you’re still the master of your own employment. You don’t answer to a boss that can bin you at a whim, and you can work for whomever you want and at whenever time of the day you would like; it’s really not that steep a price to pay if you think of it that way. Sure you have to be more careful with your earnings and set aside some cash for the taxman, but you’re not going to be a successful contractor if you can’t manage your own financial matters, now are you?

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Tardy contractors targeted by taxman’s new campaign

Foot-dragging contractors beware: Her Majesty’s Revenue and Customs has you in its sights if you’ve yet to submit your Self Assessment return.

The new programme, dubbed the My Tax Return Catch Up by HMRC, is designed to make it ‘quick and easy’ to update the taxman with any information you might have conveniently forgotten to send in over the years. It’s actually a bit of an amnesty scheme, as you can avoid falling victim to mounting penalties and you run a good chance of settling your tax bill on better terms than someone who doesn’t avail themselves of the new Catch Up initiative.

However, don’t think that you can just send in a cheque to the taxman and you can wash your hands of the whole thing – you’re going to have to contact HMRC either online, by the post, or by ringing them up. This is a limited time offer, as well – you’ve got until 15 October of this year before the window on this amnesty programme closes.

If you ask me, it’s a nice olive branch that HMRC is offering to contractors by providing a scheme to manage any unpaid tax over the past few years. Keeping your tax affairs as up to date as possible is incredibly important, especially since the alternative could be incredibly punitive penalties; if it goes on too long and if the figures are high enough, there’s a good chance you could even see yourself dragged into court to answer for your recalcitrance, so I really don’t see how you can argue that taking advantage of this new initiative isn’t in your best interest as a taxpayer.

And let’s be honest – we all know how bad the penalties can be. Just one day late and you owe the taxman an additional £100, and after three months go by you’re liable for £10 for every day up to a punishing sum of £900, and the six month mark is commemorated by either 5 per cent of your tax due or another £300 depending on which is higher!

Do you really want to spend all that money? It keeps adding up, year after year, and suddenly it seems like things have gotten out of control; if you don’t want to end up owing the taxman thousands and thousands more than you originally did, this new campaign might be just the thing you need to free yourself of that crushing burden.

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Tell the taxman if you’re shuttering your doors

If you’re a freelancer or contractor and you’re going out of business either because you’re shuttering our doors or your selling your business, tell the taxman!

That is, at least, the message that’s been pushed by Her Majesty’s Revenue & Customs, as the tax collector recently issued reminders to everyone who would listen that, yes, you need to pay your taxes, even if you’re getting out of the freelancing business and moving on to greener pastures. HMRC says that it’s a requirement to inform it if you are indeed selling on or closing your business, and in order to make it easier for contractors or freelancers – though it’s hard to believe that the taxman would ever make anything easier for anyone ever – there’s now a handy online form that a contractor or freelancer can fill out if they have plans to cease trading.

The online form requires you to reveal a myriad of information including a contractor’s national insurance number, taxpayer code, and other personal contact details. The form pays particular interest to the national insurance and self assessment contributions of a contractor, and since so many Brits have indeed turned to self-employment as a way to make ends meet, this new online form could see a large impact if this new crop of freelancers decide to return to traditional full-time permanent employment sometime in the future, perhaps when the dust settles and economy finally recovers fully – though when that could be is more or less anyone’s guess, what with the absolute mess of things in the eurozone at the moment.

Still, contractors and freelancers have indeed played an important role in trying to push the economy more towards recovery than anything else, so it may not be as long as you think before we see people leaving their freelancing gigs and returning to regular employment. Unemployment in the UK is most definitely lower than it could be right now thanks to the contributions of contractors, and since contract workers are so flexible this allows firms to still complete projects without the larger cash outlay that permanent employees would lead to, keeping costs down and maximising revenues, so if nothing else contracting is playing an important role in its attempt to kickstart the economy once more, regardless of the massive mess in the eurozone.

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UK contractors to receive their unpaid tax bill fines

You better hope you don’t have an ominous envelope fro the taxman waiting for you today, as HMRC has started sending out fines to contractors in the UK.

The 31 January self-assessment deadline has come and gone, and if you were one of the lucky few who couldn’t get their act together in time, congratulations: you’ve earned a five per cent penalty on any taxes you owe. You’ve got six months to pay the balance unless you want to earn an additional five per cent penalty – and yes, they not only stack together but the taxman adds interest to any sums that are outstanding, so if you’re a contractor or a freelancer you could be in for a world of hurt if you let this go and don’t deal with it quickly!

Listen, I know that it’s a pain in the arse to deal with the self-assessment process for all too many of us freelancers and contractors. It’s confusing and time-consuming, and you’ve got to balance it with actually doing work for clients, but you need to set time aside for these necessities, especially if you’re running into  problems getting these things done properly. If you’re truly clueless you should go find an accountant to help you muddle through, as the money you spend on a qualified expert will most likely be much, much less than what you’d typically spend on fixed penalties and late fees.

In fact, you’re already at least £100 in the red with HMRC as it is, as the taxman sent out fines to everyone who missed the self-assessment deadline in early February – all 850,000 of them. On top of that, if you didn’t get your forms in right afterwards like the 60,000 self-assessors who did so the week after the deadline, you’ve got an additional £10 a day fine tacked on, so quit mucking about and get your particulars in to Her Majesty’s Revenue & Customs before you end up paying through the nose for your lack of foresight, you big mutton-head.

You truly have to make the time to get your self-assessment in now, as you’ve waited more than long enough. If it means you take a few days in between projects – or if you put one or two on the back burner to get your financial house in order – you shouldn’t hesitate and just go about and do it. You’re haemorrhaging  cash at an alarming rate, and the taxman’s not going to just forget about it, so do it now before it balloons to an unmanageable figure that could see you in serious financial trouble.

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So, who thought the 5th April was a good idea then?

In Great Britain, we have always been out of step with the rest of Europe. This is not only a recent issue, but has been going on for centuries and probably back to the Saxon invasion (not the band). However, unlike the rest of the world, we decided to have the most bizarre taxpayers year end in the developed world. The vast majority of EU countries use the normal calendar year end of December and the USA joins in with this. Australia went for the end of June, which makes sense as it fits in with their seasons and also Scott and Charlene.

But not us. We have the 5th April as our own tax year-end and this fits in with nobody, it makes little sense to clients or Accountants alike. Not only is it awkward, it is steeped in a history that illustrates our island mentality. Hundreds of years ago we had new year’s day on the 25th March  – because this is 9 months before Christmas day and is supposedly the day an Angel visited Mary and told her to book a 12 week scan. At the time, we used a different calendar to the rest of Europe –well why not, we didn’t like them back then either – and  so our calendar dates were different by 11 days.

After a while, and with the Pope being a bit bored having to remember different dates for different countries etc, he told us to get it sorted out. So we added 11 days onto our calendar and caught up with everyone else. Hence, 11 days after the 25th March is the 5th April each year. There you have it – next time you get annoyed with the 5th April being the most ridiculous personal tax year in history, don’t blame the Inland Revenue – pop to your local church and have a word with the Vicar/Priest/Monk.

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Don’t leave your online self-assessment to the last minute

While it’s easy to feel that you’ve got plenty of time until the 31 January deadline, leaving your online self-assessment to the last minute could be dangerous.

It may be hard to avoid procrastination, especially when you’ve got more than two months to get your online self-assessment in, but industry experts warn that you could end up having to rush to get our assessment in under the wire, which could all too easily lead to mistakes and errors on your part. Worse yet, missing your deadline completely will see you being subject to fines that you could have avoided if you would have just taken care of things even a week or so in advance.

Still, many Brits will stubbornly wait until the last minute. Figures from January 2012 revealed that close to 450,000 online submissions were made on the last of the month – and that just over 37,000 took place between 16.00 and 17.00 that day!

Even despite the rush, around 850,000 submissions came in after deadline – and this is even after call centre strikes prompted Her Majesty’s Revenue & Customs to extend the 2012 deadline to 2 February. There are of course advantages to filing early, but freelancers and contractors often lack the relevant documents, making early filing much harder for a temporary worker than a permanent one, but also opening these freelancers up to procrastination and the possibility of missing the deadline all too easily, while also acting to delay the issue of any refund due to you from the HMRC.

By that same token, if you are owed tax back from the HMRC, submitting your return early will mean that your case is near the top of the pile when it comes time for refunds to be issued.

Also, if you are using a tax adviser or accountant, they are likely to be less busy earlier in the tax year so will be able to give your case more time and provide an even better service.

If any errors are made, it also gives you a bigger time window for these to be rectified.

If your return is late you will be charged a penalty of £100, and if you still haven’t filed three months after the January 31st deadline then a fine of £10 a day will be levied up to a maximum of £900. After six months the fines could well top £1,000 and would still apply even if it later emerged that you did not actually owe any tax.

Brookson offers help and support on self assessment matters six days a week.

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Some HMRC online services will be unavailable this weekend

Contractor accountants are warned that HMRC will be carrying out upgrade work to its website this weekend.

The Revenue website was down at the beginning of last month to enable essential maintenance and upgrade work. However, it now appears that thus work was more complicated than expected.

Luckily the work will not affect employers who need to submit their payroll end of year returns before the May 19 deadline. Corporation tax, self-assessment and CIS will not be affected either, but it will not be possible to register for HMRC’s online VAT service while the upgrade work is taking place.

HMRC likes to give taxpayers as much notice as possible of any proposed disruption to its services.

Although the VAT online registration service will be offline from 16:00 on Saturday until 01:00 on Sunday morning, businesses will still be able to file their VAT returns. Anyone who wants to enrol for VAT Online during the downtime will be able to do so through the Government Gateway. http://www.gateway.gov.uk/

The VAT on e-services page will also be unavailable for 10 minutes while the upgrade takes place. HMRC has not revealed which ten minutes.

The other services that will be affected are obscure ones such as Electronic Binding Tariff Information and the Rebated Oils Enquiry Service.

It’s obviously important for HMRC to keep it’s services up-to-date and weekends are probably the most sensible time to do upgrades and maintenance. Let’s hope that everything goes to plan and the work doesn’t cause widespread disruption.

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Did HMRC’s Easter shutdown affect contractor accountants?

Most contractor accountants probably agreed with the FPB when it criticised the Revenue for closing down its online services throughout the Easter holidays.

Just before the holiday, the Forum of Private Business said the shutdown showed HMRC did not understand the needs of businesses. The Revenue only announced it would close down the entire online network a few days before the 2011-12 financial year came to an end. Its IT systems were to be out of action throughout the holiday so that upgrade and maintenance work could be carried out.

Although the majority of services should have been back online by 6am on the 10th April, some would not be available until the 11th.

This shutdown affected anybody wanting to file PAYE, Self Assessment, Corporation Tax and CIS returns, as well as those submitting stamp taxes, pension schemes and Child Trust Funds.

The online VAT filing service remained online until midnight on the official deadline date and was then taken offline for a few days.

A Revenue spokesman said systems had to be taken down so the department could ready them for the new tax year and more scheduled maintenance might need to take place in October.

Phil Orford, the FPB’s chief executive, said the work took place at a totally inappropriate time and businesses will struggle to understand why HMRC is upgrading its systems at such a critical time in the tax calendar. The fact that the Revenue only gave businesses a few days notice of the shutdown showed it did not understand their needs.

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Contractor accountants should prepare for payroll year-end

It’s payroll year-end time again and some accountants will have a list of key tasks that need to complete for their clients.

HMRC has published a checklist of all the various PAYE deadlines for this year on its website. The first important deadline is April 19th. This is the date by which postal payments of outstanding PAYE and Class 1 national insurance contributions must reach HMRC.

People who use electronic payments must make sure their payment reaches HMRC’s bank account by the 22nd of April. However, HMRC has warned that because the 22nd falls on a Sunday this year, payment will need to be in its account by the 20th unless your bank operates a faster payments system that allows transactions to clear on Sundays.

The next date for the diary is the 19th of May. This is the deadline for submitting Employer Annual Return P14 and P35 forms. Employees should be given their P60 form no later than the last day of May.

The majority of employers are required to file their end of year returns online. Similar to the system of online self-assessment filing, the first step of the process is to register on the Revenue’s website. This needs to be done at least a week before the deadline date in order to leave enough time for the activation code to arrive.

People who use accounting software to process their payroll will find that their program does most of the work for them. Employers should already have received information about any changes they need to implement to their payroll package and it would be a good idea to check these over as soon as possible.

The major software providers, such as Sage, keep their telephone support lines open longer during the payroll year-end period but even so, the lines are often extremely busy and there can be problems getting through to somebody if you have a problem.

Don’t let yourself get caught out at the last minute. Start preparing for payroll year-end as soon as possible!

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