They’re ever so popular and a routine task for most people every year, the famous Tax Return. As part of our Tax Returns in Walsall and the wider West Midlands service, we come across a variety of forms that clients require, whether on an individual or corporate basis.
These are different of course to other forms of tax that you may need to pay through a different procedure, for example VAT returns, Business Rates or Council Tax, or stamp duty on a property transaction (with relevant reliefs such as for first-time buyers).
They should be simple really, and then a routine task every year, however in reality there are issues that need clariying in order to correctly reduce any tax liabilities, both before any Tax Return is actually submitted and when dealing with any Inland Revenue queries afterwards.
We therefore have 7 of our common top-tips for those dealing with these Tax Returns, which are handy to know and clarify with any tax advisors you do already have or plan for:
1. Remember That a Lot is Online Now
This is true for a lot of accounting, with less of the manual form-filling in the post, and more online preparation and submissions.
It’s important then to make the most of this, whether that’s the right software system with all your raw data for the Tax Return, keeping digital copies of back-up invoices and documentation, and having different people access the same account for preparation, checking, and then submission purposes.
2. Allowable Income & Expenditure
If you break things down, it boils down to noting the difference between what you received and what you spend in order to establish the right figure to base your tax calculation on.
It sounds easy, but the expertise comes with knowing what to include and exclude, sometimes just an apportionment of a certain cost which may be split between say a home and business purpose.
3. Cracking Calculations
The number-crunching is the magical part, and although there are computerised systems to help, you can’t beat sound human judgement on this.
There will be tweaks like allowances and deductions that can make all the difference in calculating that final tax liability as low as possible.
4. A Final Sanity Check
This is always worth doing, even just to rule out any human error as well as actual omission of information and expertise. Preferably checked by someone who has not drafted the tax return, this will help iron out any last minute changes needed.
5. Issuing Payments
The painful bit of course is issuing the final tax liability, whether one-off or on an agreed payment basis. In some scenarios though this can work the other way in that you’re actually due a credit payment from Inland Revenue if your expenditure was above your income for the year.
6. The HMRC Contact
Even with a submitted tax return and payment, you still may need further liaisons with HMRC, particularly if you’re chosen in any random sampling of people and businesses even though there is no immediate concern. Therefore be prepared, and see if any appointed accountant can be the agreed point of contact.
7. The Overall Strategy
Rather than just processing every year’s tax return year after year, you really need that wider tax advice to make the most of things longer term.
Even if there is initial time and cost to re-structure things or bring in expertise, this may pay off longer term with reduced or at least deferred tax liabilities.
In short, take a step back and see other ways that you can reduce your tax liabilities. Even if you’re still preparing and submitting tax returns yourself and bringing in the experts for certain parts, this can truly pay off longer term.