10 common Self-Assessment Tax Return Mistakes

…. and how to avoid them

Not everyone needs to complete a Self-Assessment Tax Return (SATR), but for those who do, it’s not always straight forward.

If you need to complete an SATR, HM Revenue & Customs (HMRC) will send you a letter in April each year enclosing a SATR for you to complete. There are penalties for not submitting your SATR on time and you may have to pay a penalty if HMRC deems you have not taken enough care in completing it.

If you make a mistake on your SATR you’ve normally got 12 months from 31 January after the end of the tax year to correct it. This is called an ‘amendment’. For example, for the 2011-12 return you have until 31 January 2014 to make an amendment.

There are a number of common SATR mistakes that can hold things up (possibly leading to a penalty fee), cause you problems or even prompt HMRC to look more closely at you. So it’s best to be aware of them and make sure you don’t make them!

Signature & date

Simple mistake, but people do forget to sign their Tax Returns. Sign and date box 22 before you send it in.  A photocopy will not suffice.

National Insurance number and Incorrect Unique Taxpayer Reference (UTR)

Make sure these are correct The UTR is a ten digit reference number unique to you that will be on any correspondence you receive from HMRC. It is important to include these and to get them right.

Not enclosing supplementary pages

For additional income not covered by the main Tax Return, you will need to include supplementary pages. Additional information which may be relevant includes:

  • Interest from gilt edged and other UK securities, deeply discounted securities and accrued income profits

  • Life insurance gains

  • Stock dividends, non-qualifying distributions or close company loans written-off

  • Post cessation receipts

  • Income from share schemes

  • Lump sums or compensation payments from your employer, or foreign earnings not taxable in the UK

  • Taxable lump sums from overseas pension schemes

  • Certain employment deductions

  • A claim to age related Married Couple’s Allowance

  • Other tax reliefs not found in the main part of your tax return

  • Loss relief claims

  • Income from property

Writing things like: “info to follow” or “as per accounts” instead of writing required figures

HMRC does not accept information like this. Include all the information that is needed where it is needed and when it is needed. Everything should be submitted together.

Incorrect figures

Double check any calculations to ensure you pay the correct amount of tax. Any deliberate wrongdoing can result in prosecution.

 Not declaring all income/Capital Gains

There are severe penalties for failing to declare all relevant income and Capital Gains. For deliberate errors, e.g. omitting a source of income on purpose, you could potentially be prosecuted.

These are the types of income/Capital Gains you need to declare:

  • Income from employment

  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance,

  • Pension income

  • Interest, dividends from savings, bank accounts, building societies investments or Trusts etc.

  • Property income

  • Foreign income including evidence of tax already paid abroad

  • Capital gains

  • Employee share schemes

  • Dividends

However some items can be excluded from your Tax Return income, including:

 Interest or dividends or bonuses from tax exempt investments (for example, ISAs and National Savings & Investments Savings Certificates)

Interest and terminal bonuses from Save As You Earn schemes

Premium Bond, National Lottery and gambling prize winnings

Interest awarded by a UK court as part of an award of damages for personal injury or death

Trying to claim expenses that can’t be claimed

There are complex rules governing the deductibility of expenses and there are costly penalties for incorrect claims. If in doubt check with your accountant. It is far better to check these things carefully; some things you think can be claimed, can’t. But there are also a few things you may not have thought to claim.

Ticking wrong boxes

Use the guide HMRC includes with your Tax Return, to help you. Its very clear and takes you through the process step by step.

Missing the deadlines

The deadline for submitting a paper SATR is 31October following the end of the tax year and for submitting a SATR online, it’s 31 January after the end of the tax year. If you miss the deadline, you will have to pay penalties which increase the longer you delay.

Improper Record-keeping

You need to keep proper and complete records. These are the records you need to keep in order to complete your SATR (if they are relevant):

  • P60, P45 and P11D

  • Expense records

  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance

  • Pension records

  • Bank statements

  • Property income

  • Foreign income including evidence of tax already paid abroad

  • Capital gains

  • Employee share schemes

  • Student loan payments

For the self-employed you will need to maintain business records such as:

  • Cash books

  • Invoices

  • Mileage records

  • Receipts

  • Bank statements

  • Records of all sales and takings, purchases and expenses

  • Money taken out of business for personal use (if any)

  • Personal money put in to the business (if any)

If possible, it is always better to hire a qualified accountant or tax advisor to help you complete your Self-Assessment Tax Return because they will make sure it is correct. They will always seek to put your needs first, helping you to reduce your tax bill as much as legally possible. Particularly if you have lots of sources or complicated income, an accountant or tax advisor can help make sure your tax affairs are handled properly.

 

About Carol Cheesman

Carol Cheesman is Principal of Cheesmans Accountants based in Islington, North London. Always client focused, she regularly meets with clients in person and has a hands-on approach in all of the services the firm offers. http://www.cheesman.co.uk

 

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