Common Tax Return Mistakes: How to Avoid Self Assessment Pitfalls
As a contractor, there’s a lot to keep on top of when it comes to tax and Self Assessments. When you’re busy balancing the demands of running a business, there are common mistakes that you might overlook which could have significant consequences.
This guide provides you with the necessary insights to avoid any Self Assessment pitfalls and help approach your tax responsibilities with confidence.
Missing deadlines
With deadlines throughout the year, it can be challenging to keep up with the ones that apply to you.
Missing key deadlines can lead to significant consequences, such as financial penalties. If you miss a tax return deadline by up to three months, you’ll pay a late filing penalty of £100. This penalty will increase if you miss a deadline by more than three months. If you miss a payment deadline, this could also be more than £100.
Key Self Assessment deadlines
Here’s an overview of all the key dates and deadlines you need to know if you’re filing a Self Assessment:
The tax year runs from 6 April to 5 April. When registering for a Self Assessment, you must do so by 5 October of the tax year in which you need to file a return. For example, if you are filing your tax return for the period between 6 April 2024 and 5 April 2025, you must register for Self Assessment by 5 October 2025.
If you want to file your Self Assessment by paper, this must be submitted by 31 October.
If you are filing your Self Assessment online and if you or anyone under your company are paid via PAYE, then you will have until the 30 December to do this.
If you are filing your Self Assessment tax return (not via PAYE) online, you have until 31 January. The first payment is also due by this date.
If you provided yourself or your employees with any benefits in kind or expenses through your company, you must submit a P11D to HMRC and the employee. This is due by 6 July following the tax year you’re submitting for.
The second tax return payment deadline is 31 July.
You will also need to pay Corporation Tax, you must file and pay for this within 12 months after your company’s accounting period ends, or three months after receiving a notice from HMRC requesting a return.
The deadline for filing and paying your company’s VAT Return is one month and seven days after the end of your accounting period. Please note that your VAT return must be paid on the same day as filing.
Being aware of these dates and ensuring you’re on top of your deadlines means that you won’t face any late filing penalties.
Incorrectly declaring your income
Underreporting or misreporting your income can lead to some significant penalties and interest on top of your tax bill. If the case is serious, you could even face the risk of prosecution. Therefore, this must be done correctly.
To avoid any penalties, ensure that you do the following:
Gathered relevant documentation – This includes bank statements and receipts.
Cross checked figures - Make sure that what you report matches your financial records.
Consulted a professional - If you have a complex income situation, or simply want to relieve yourself of the burden, then using a professional tax return service is your answer. This way you can feel confident that your income has been declared properly so you shouldn’t face any issues or penalties further down the line.
If you are in a situation where you have realised that you haven’t declared some income to HMRC, then contact HMRC as soon as possible. They may be more lenient if it turns out you didn’t know you had to declare the income or weren’t sure how to declare it.
Failing to claim deductions
Eligible deductions can often be missed, and therefore, you risk losing out.
To avoid this, do the following:
- Understand the deductions available to you, such as corporation reliefs and self employed expenses
- Maintain organised receipts and documentation
- Minimise the stress and make things easier by appointing a professional
- Look for missed deductions in previous filings. You never know what you might have missed and could claim back
To remain compliant and avoid any penalties, follow these essential guidelines.
If you don’t want the hassle of Self Assessments, seek a compliant accountancy services provider to take care of it for you. At Danbro Accounting, our accountants specialise in cloud accounting and CIS, so whatever your specific needs may be, you’re in safe hands.
Lara Hodkinson, Danbro Group's Head of Accounting, joined the company as a Client Manager in 2011. Lara’s since held various management and accounting partner positions, before taking charge of both Danbro Accounting and Danbro Business Solutions in 2023.
This article was written for Handpicked Accounts by Lara Hodkinson of Danbro.
