Counting down to self-assessment: how we manage the rush

We’re approaching the business end of the year again – self-assessment season is in full swing and with COVID-19 to contend with as well this year, we’re busier than ever.

There’s no doubt the virus has complicated matters for accountants this year, with several deadlines pushed back and tax deferrals announced since the pandemic struck back in March.

Then, of course, there’s the taxable grants provided through the self-employed income support scheme (SEISS). A little bit of work needs to be done around that as the first grant was backdated to 1 March 2020, which obviously fell at the back end of the 2019/20 tax year.

Other than that, it’s very much business as usual.

Remember HMRC’s character, Herbert , who proclaimed: “tax doesn’t have to be taxing?” That’s certainly true if you engage us to assist you or submit your tax return on your behalf. The earlier you do it, the better.

Who needs to submit a tax return?

If you are self-employed, a construction industry scheme contractor, have property income, receive dividends as part of a remuneration strategy or earned more than £100,000 in 2019/20, you need to submit a tax return.

This needs to be done on or before midnight on 31 January 2021, which is also the deadline for the first payment on account on your 2019/20 tax bill.

Speaking of payments on account, those of you who deferred your second payment on account back in July 2020 should settle as soon as possible.

What records are required?

If you’re new to Red 76, share your records with me and I will review them to understand your position before recommending the best course of action.

I need records of all your business’s sales and income from 2019/20, plus all business expenses incurred. If you’re VAT-registered, I’ll need your VAT records. If you’re an employer, I’ll need your PAYE records. On top of that, records of all your personal income are also required.

And, of course, if you claimed the first taxable SEISS grant – which spanned 1 March 2020 to 31 May 2020 – because your business was adversely affected by COVID-19, I will need a record of that, too.

Penalties for missing the deadline

Late payment penalties are charged when tax remains unpaid 30 days, six months and 12 months after its due date for payment.

You can avoid them if you enter into a time-to-pay arrangement before tax is due and you pay all the tax owing under that arrangement on time.

It’s possible  to defer paying your 2019/20 tax bill – including the July 2020 payment on account – until 31 January 2022 through the time-to-pay scheme.

This spreads the payment of any tax you owe for 2019/20 into 12 monthly instalments. To be eligible, you must:

• owe less than £30,000
• be signed up to gov.uk and have a government gateway ID
• file your 2019/20 tax return and know how much tax you owe
• not have any other outstanding tax returns or liabilities.

For expert help with your tax return, call me on 07803 782100 or email me at jon@red76tax.com to discuss your options.