Self Assessment tax returns are, more often than not, complicated, time consuming and confusing. They are also serious legal documents which you can be held accountable for. For all these reasons, if you don’t fully understand what you are doing, yet still attempt to fill out the HMRC tax return yourself, there is a strong chance you could end up with hefty fines issued to you ,either for providing incorrect information or for missing deadlines.
Should you use an accountant to help with your tax return?
If the thought of filling your tax return in fills you with dread, perhaps because you aren’t great with numbers or because your tax situation is particularly complex or simply because you don’t know when you could possibly find time to complete the form, then hiring the services of an accountant may be advisable.
Contrary to popular belief, tax returns are not just documents for the self employed. Whilst self employment is the most common reason for filing a tax return, there are many others who must also complete a self assessment tax return. After self employment, the next most common reasons for needing to fill in a tax return are;
- Job related expenses over £2500
- You are a landlord – including non resident landlords
- Your annual income is £100,000 or more
- You have income from savings, investment or property- above a certain level
- You receive taxable income from overseas
- You are over 65 and receiving a reduced age-related allowance
- You are required to pay tax that cannot be collected through PAYE
Strict deadlines and standards are applied to all tax returns. Failure to meet these standards and deadlines results in strict penalties. In 2012 around half a million people received fines of at least £1,200.
Currently, any person who submits their tax return one day late will be charged a £100 fine. A penalty of £10 per day follows this initial fine, for a maximum of three months (£900). After the three month deadline either £300 or 5% of tax due (whichever is higher) is charged and a further minimum of £300 is charged after a six-month late period.
Hiring an accountant significantly reduces the likelihood that you will be subjected to any penalty fines.
It is often particularly beneficial for people claiming back job related expenses under PAYE to use qualified professionals, to make sure the right amount of expenses are being claimed. In a similar way small and medium-sized business owners, who are commonly unaware of tax related legislation could gain from specialist services to help complete their tax returns.
Accountants will be aware of current tax laws, which are subject to regular change, and can ensure that you are aware of, and are claiming for, all deductions eligible. Using a qualified accountant, therefore, may reduce the amount of tax that you need to pay.
