Simon Littlejohns, Tax Partner at Birmingham accountants Friend Partnership Limited offers some tips for the successful navigation of the personal tax return minefield.
With the deadline for filing paper returns now passed, the filing deadline for the electronic submission of 2014 income tax returns is fast approaching. With a little under three months to go until 31 January 2015 all taxpayers with a tax return filing obligation should be gathering information to enable them to complete the necessary return or pass their tax papers on to their tax advisers.
Some useful tips which might help are:
- Refer to the previous year’s income tax return to identify all sources of income and expenditure and obtain the corresponding information for the current year.
- Identify any new sources of income in the year and consider whether there is any income to declare e.g. dividends on new shareholdings.
- If providing information to your professional adviser make sure that it is complete with supporting documentation for the year in question and not earlier or later years. If you have any doubt about the relevance of any item, include it for your adviser’s attention.
- Tell your adviser if sources of income have ceased i.e. bank accounts which have been closed.
- Are there any one-off transactions in the year which may require reporting e.g. a capital gain on a share or property disposal?
- Are there any new sources of income which may require the completion of supplementary pages e.g. the rental income pages following the acquisition of a buy-to-let property.
- As part of the process prepare and keep a record of any material gifts made in the year whether on a regular or one-off basis.
- If submitting your own return online make sure that you have registered with HMRC in good time. When completing your return make sure that you have all the relevant information to hand and go through the screens on a methodical basis. The HMRC website is reasonably user friendly but care is needed. You don’t have to complete the return in one go as you can save your work at any stage in the process. Any supporting documents which you may need to attach in support of return entries, e.g. Capital Gains Tax calculations, need to be in PDF format. Once the return is successfully submitted you will get a confirmation receipt.
- Provide explanations for any one-off transactions. Such information needs to be provided especially if there is any uncertainty as to how an item might be treated for tax purposes.
- Wherever possible avoid using estimates as this will be flagged to HMRC and will mean that the return may need to be amended at a later date.
- If you find omitted income, or allowable tax deductions, from an earlier year inform your tax adviser immediately. If you complete your own return, and are within time, amend it online. If you are out of time you will need to seek specialist advice.
- If HMRC raise any questions in connection with your return seek proper professional advice before answering.
- Most importantly of all, if you have a tax adviser please get the information to them in good time to enable them to complete the return without a last minute panic. Information received in the last week of January can cause stress for all concerned and may not get processed correctly, or on time.
- Make a New Year’s resolution to keep all relevant information in one place and pass it on as soon as it is all complete.