10 Tips to deal with annual panic-the tax return!

It is an unfortunate fact that about a tenth of taxpayers who are required to complete a tax return do not meet the filing deadline each year. Some 900,000 people missed it in 2003! This may be good business for the Inland Revenue, as there are automatic fines of £100 for the late submission of tax returns plus an array of penalties for continued non-compliance. Nobody likes filling in forms but putting off the chore can be costly.

Here are 10 tips to ensure you submit to the Inland Revenue an accurate and complete tax return on time:

1. Do not assume that you do not have to complete a tax return just because the Inland Revenue has not sent you one. It is up to you to notify the taxman of any change in your financial situation, which could result in a tax liability. For example anyone who receives a large windfall, has freelance earnings or who lets property will need to submit a tax return. If you enter the higher rate tax band for the first time and receive dividends or bank interest you will need to notify the Revenue that you require a tax return by no later than 5 October.
2. Treat the tax return like an exam paper where you need to achieve marks of 100%! So no pressure there then. Ensure that you do not leave any information out (a good exam rule!). Like an exam read through the completed return to make sure that it makes sense. Compare your answers with last years return. Have you included everything? Does it look similar? Are there things that look odd? If so, the taxman may want to ask you some questions, so explain the oddities in the space provided on the form.
3. Remember, however, you do not need to enter details about individual savings accounts (ISAs). They are tax-free investment products.
4. Pension contributions often cause confusion. With effect from 6 April 2006 the new regime annual limits and a life-time limit intended to simplify and make more equitable the pension contribution rules.
5. The Capital Gains tax section of the return is a particularly complex area. It is vitally important that you keep an accurate record of all your transaction history with dates and costs of acquisition for each asset. And the capital Gains tax pages may still be required even where your gains are less than the exemption threshold if total proceeds from disposals in the year exceed another threshold!
6. Many state benefits are subject to tax. For example the basic state pension and jobseekers' allowance are taxable. By contrast, the Child Tax Credit & Working Tax Credit are not. Don't mix them up! Many people leave out the wrong ones.
7. If having submitted your return you realise that you have omitted information or have made a mistake then you must, no later than 12 months from the filing deadline of 31 January, submit to the Revenue the revised or "repair" pages of your return.
8. Don't forget to sign the form. This is a common mistake, which always results in the form being returned to you by the Revenue. An unsigned return is not a complete return so if you are thinking of leaving your submission until the last moment you could have a late filing penalty to pay.
9. Always keep all of your supporting documentation such as dividend vouchers and bank statements for two years after the end of the tax year (6 years for business records) as the Inspector of Taxes has the right to enquire into your honesty!
10. It you want to view a copy of your Statement of Account with the Inland Revenue you may do so by registering for the Self Assessment internet service at http://www.hmrc.gov.uk

As professional accountants we have the necessary knowledge and technology to be able to prepare your annual tax return accurately. If you would like help with your tax return then please contact us.