With the deadline for the submission of 2011 self-assessment returns to H M Revenue & Customs (HMRC) fast approaching on 31 January it is essential that those who are still to submit this years return, they do so in the next 7 days. Increased tax penalties for late submission come into force this year, so filing your tax return promptly and getting it right first time is more important than ever.

The opportunity to submit a paper tax return for 2011 has now passed. All returns sent to HMRC after 31 October must be submitted online.  If you have a professional advisor then this should not be an issue as he will have software in place to enable an electronic submission to be made. If however you intend to submit your own return you will first of all have to register with HMRC for Self-Assessment Online and receive a personal login.

This takes time and if you haven’t previously registered and received your login you will have to act quickly if you are to have any chance of receiving this before the 31 January deadline. You can register with HMRC at www.hmrc.gov.uk.

In your urgency to submit the return it is important to ensure that it is completed correctly and that no omissions occur. An error or omission could lead to HMRC opening an enquiry into the return which could ultimately become more costly then the penalty for late submission!

Your self-assessment return should disclose all your taxable income and any chargeable gains for the relevant tax year. It is important to note that all of your taxable income and gains must be declared on a tax return – even if they have been taxed before you received them ( or ‘taxed at source’), such as employment income, bank interest and dividends

Before commencing completion of the return you will need to ensure that you have the correct information and records to hand. For the employed this will require your P60 and possibly a P11D for the year ended 5 April 2011.

For the self-employed your taxable income is calculated by subtracting allowable business expenses from your trading income. In order to calculate your taxable income quickly and easily, it is imperative that you have kept accurate financial records. You will have needed to maintain a record of all payments and receipts alongside details of all goods purchased or sold. Additional documents, such as copies of invoices you have sent to your clients (and those sent to you by your suppliers) are also important, as are bank related records such as paying in books, cheque book stubs and bank statements.
For those that are self-employed, or a partner in a partnership, and the year end of your business is not the same as the tax year (5 April ), such as 31 December, there are specific rules about which accounting period for your business goes on which tax return.

If you are unsure which period of trading income should be included on the return, or what is and isn’t an allowable deduction professional guidance should be sought.

An accountant or tax advisor could deal with all of this process for you, albeit at a cost, and although you do not need to be either of these to deal with your own affairs, there can be real benefits in using a professional.

Using a suitably qualified professional should ensure that you are compliant with current legislation and HMRC guidance. Completing your own return may save you fees in the short-term, but if you were to be subjected to an HMRC inquiry in the future, any errors discovered may prove costly to you in unpaid tax, interest and penalties.

In addition a good advisor should be able to save you tax. They will review your affairs, and highlight areas in which changes can be made in order for your affairs to become more tax efficient, such as the type of entity the business is operating through. They should also ensure than everything is submitted and paid on time, so that your hard-earned cash is not wasted on interest and penalties.

Ultimately an experienced accountant or tax advisor should remove some of the time and stress associated with tax and HMRC leaving you free to concentrate on doing what you do best and running your business.

With HMRC’s current increased activity in return enquiries and PAYE/VAT compliance you should also consider having in place Fee Protection Insurance which will cover the cost of any accountants’ fees in dealing with an enquiry/visit by HMRC into any submitted return. More details on Fee Protection can be found at www.feeprotectiondirect.com

Finally once you have submitted your return it is essential that you remember that any tax you owe must be paid by or on the 31 January.
If you need any help or advice with Self-Assessment Tax Returns please call the TaxWise Advice Service on 01455 852555 and one of our specialists will be happy to help.