Self Assessment is one of those things. No one enjoys doing it, no one enjoys paying the bill. But the relief once it’s done… well worth it! Of course, if you’re a client of ours then that headache goes away. If your accounts are up to date (and they usually are as we use Xero with many of our clients) then self-assessment is filling in the forms, sending them to HMRC and paying your bill.
But many small business owners choose to DIY their self-assessment and understandably not being tax experts, that’s when mistakes can happen. Confusion, wrong calculations or missing deadlines are all super common. So, what are the most common mistakes we see on DIY tax returns?
Claiming expenses that aren’t legitimate
This is a super common one. Claiming expenses that are incurred in the running of your business is acceptable and in fact, we encourage you to claim absolutely everything that you are permitted to, reducing your tax bill. But sometimes people start claiming for things that HMRC won’t allow.
Wages, office costs, marketing, training, mileage, postage etc are all valid.
Anything else that’s not strictly related to running your business is not.
Trust me we’ve seen some cheeky expense claims!!
Missing the deadline
We all know the deadline, most of us have all the information we need to complete the return months before it’s due, but you know human nature… when we think we have loads of time, we tend to leave things until we’re scrambling to get all the info together.
Parkinsons law states that “work expands to fill the time available for its completion” never a truer word spoken when we talk about tax returns!!
Then with the deadline looming you’re missing documents, or just leave it too late and whoops you’ve ticked over into the next day.
Unfortunately, if you miss the deadline it’s an automatic £100 penalty. Leave it more than 3 months late and the fine is increased depending on how much tax you have to pay.
Save yourself a hundred quid and do it sooner rather than later!!
Missing out the supplementary pages
The basic form is relatively simple to fill in. But as everyone’s circumstances are different there are supplementary optional forms to fill in that enable you to declare income and gains from other sources.
Eg: Capital Gains, Property Income, Foreign Income, Employees or company directors and Self-Employment to name a few.
It’s too easy to forget one of these pages and not declare something significant. Make sure you remember!
Not keeping the right records
By law, you need to keep records of all your business income and expenditure.
Fortunately, in the digital age receipts, invoices and records tend to be online and you can usually grab them from your inbox or merchants account area.
But sometimes we lose access to these documents.
You know what it’s like, you see something on your bank statement, think “ah I know what that was” and then can’t find the receipt! No receipt = no claim.
Or even more annoying you see a big expense and wonder what it was. You have no idea where to look, the statement description isn’t clear and you end up missing out on a potentially valid claim!
Get a good record-keeping system going and you can avoid all these hassles.
It’s amazing how many people make simple easily avoidable errors on the tax return. I know everyone’s in a rush and sometimes that little voice inside your head is telling you to just select something and submit it! But you know the score by now… that’s the sort of thing HMRC will notice and then you’ll have to spend even more time dealing with an investigation or answering queries.
- Entering the wrong unique tax reference number
- Mistyping your national insurance number
- Not signing the return if you are filing the paper version
- Ticking the wrong boxes
Are the sort of simple error people can make unknowingly.
We’d love to welcome you as a client and take this headache away from you, but if you choose to stick with DIY, watch out for those common mistakes!