The study released today showed more than a quarter of small businesses believe other accounting issues such as slow or late payments are the biggest obstacles to the success of their business in 2015, with the same number saying chasing payments is one of the most difficult parts of running a business.
And these inefficiencies are costing businesses a significant amount of money and time with the average business saying they have lost up to £35,000 in their first year because of bad practices, potentially equating to over £175 billion in lost revenue (with over 5 million SMEs in the UK).
But it’s not just money – the average small or medium sized business (SME) in the UK has been set back a minimum of 12 months as a result of these inefficiencies as they are unable to focus on other areas of the business.
If businesses in the UK could start over, 17% admit that they would put better systems in place to ensure the business runs smoothly, whereas one in 10 would have started a different business in a different sector and 20% would just have hired ‘better’ people.
Check whether you are liable for self-assessment: Start by going online to the Government’s website Gov.uk to find out about whether you need to file a self-assessment tax return. In particular, go to http://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return. The website is easy to use and gives a full explanation of self-assessment. There are help sheets for the different categories of people who have to file self-assessment returns. It will also direct you to the HMRC website where you file your return. Broadly speaking, anyone who has income other than PAYE, the self-employed, business partners, and company directors have to file self-assessment returns.
Check your post to find your personal self-assessment code: If you need to file a self-assessment tax return, you should have received a letter from HMRC with a personal code – the Unique Taxpayer Reference. You will need this code to file your return online. If an email arrives that appears to be from HMRC, it will almost certainly be a hoax. HMRC only make contact through the post.
Be as thorough as you can: Make sure your have all the right receipts for your return, along with statements of account, interest or dividend payments. Remember that interest from accounts can be liable for tax and each year HMRC investigates the affairs of people who have not declared interest or dividends. Anyone who rents out their home must also declare the income on their self-assessment form, something easy to overlook if a new relationship is formed and a former residence let out.
Don’t leave it until the last minute: Apart from the possibility of being surprised by a high tax bill, you also run the risk of a £100 penalty if you fail to file your return by the deadline, even if you have nothing to pay. If you are more than three months late, the penalty increases further. One of the pitfalls of leaving it until January to file your return is that you may find the HMRC website is running very slowly because of all the other people trying to do the same as you.
Be patient: January is a very busy time for HMRC and their staff are only doing their jobs. If you need to contact them by phone, you will not get results by being aggressive or too obvious about your frustration. Be prepared to wait ever longer as the deadline approaches. The best solution is to organise your affairs so that you can file your return without having to speak to anyone at HMRC.
Get help from an accountant: If you need help, ask a professional, who will save you time and money. What you pay in fees will easily be covered by the tax you save and if you are using an online accounting solution, you will not have to waste time and effort on meetings and paperwork. An accountant can work out the allowances you are entitled to, so you pay no more than the right amount of tax. Allowances could cover transport expenses, the cost of tools or of using your home as an office.
Think beyond January 31 to the end of the tax year on April 5: There is still time to use up ISA savings allowances before the financial year ends on April 5. The same goes for pension contributions allowances. Almost everyone’s pension is now underfunded, so this is definitely a topic you should consider.
Think ahead to next year’s self-assessment deadline on January 31, 2016: It is a good idea to set up a reminder to yourself at the end of your summer holiday so you can start considering what you will need for next year’s tax return. It is certainly worth putting all your finances in order and declaring all additional income, because being investigated by HMRC is not a pleasant experience
Now, check out our guide to filling out your HMRC tax return