Happy New Year!?...

At least it certainly feels like new year for accountants and tax professionals.

With the official tax filing deadline of 31st January just behind us, it’s assumed we can breathe a sigh of relief that it’s all over for one more year, however just because there’s a filing deadline it doesn’t stop taxpayers from filing their tax returns throughout the year so there shouldn’t really be this last-minute rush each year.

Also, HMRC announced, for the second year running, that they will defer the £100 late filing penalty normally due if tax returns are filed after 31st January, until after 28th February 2022. This has taken the pressure off a lot of taxpayers filing their tax returns late to avoid a penalty but the tax payment due date still remains as 31st January so interest will still be due from 1st February for late payments of tax.

For us, this isn’t necessarily welcome news as it just pushes the urgency for taxpayers to file their tax returns down the line, but more importantly, it keeps the HMRC enquiry window open for longer.

We know that with COVID many people have struggled to prioritise their tax affairs and have many other priorities. And paying a tax bill after a financially tough year is never a pleasure.

GET YOUR TAX DONE EARLY!

So, with a new year comes new plans and we encourage everyone to get their tax returns done each year in plenty of time and here’s our 7 reasons why;

1. You’ll be doing it whilst most things are fresh in mind, the tax year will have not long passed, and all your relevant documentation and information will be more readily available. A P60 is normally issued in May, a P11D in July and other investment certificates around the similar time, so why put it off.

2. You get more time to plan for any surprising tax bill so you can put some money aside or arrange a financial plan. Although it’s always ideal to be putting tax side for the money you earn, we know that not everybody does this and if you’re living on a tight budget after a tough year in business it might not even be possible. There are options to support you and the more notice you have the better it will be for you to plan.

3. The sooner you file your tax return, the sooner the HMRC enquiry window is closed. HMRC have a year from the date a tax return is filed to open an enquiry into a return. It doesn’t mean they can’t still go back to earlier years under certain circumstances but it does mean the reasons for opening the enquiry are open to challenge if there are no grounds to do so.

4. You’ll be able to stay on top your finances and close off any bookkeeping records sooner, meaning your records will be more up-to-date to give you a better picture of your current financial position.

5. You’ll have plenty of time to adjust your tax code for the current year if you find yourself on the wrong tax code following the submission of your tax return.

6. You’ll be ready for MTD when it kicks in over the next few years when sole traders and landlords will need to file their records quarterly.

7. You’ll feel pretty pleased with yourself for doing so. Most clients we speak to feel a sense of achievement and relief when their tax return is done and out of the way, so why not get that little hit of dopamine for doing it earlier in the year. High five!

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It’s no secret it’s a busy time for accountants in January and going forward we’ll be putting in tighter measures to make sure we’re not working through the night to get tax returns done for all the last-minute stragglers. If you know that’s you, why not set yourself a goal to get the information to us in plenty of time so we can help you plan ahead and you can stay on top of your finances.

After all, 2022 is the Chinese New Year of the Tiger, and a year to be courageous, assertive, powerful and brave.

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If you’re feeling brave and want to get ahead of the game for 2022, download our handy Tax Return Checklist below.

FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment, and professional services. Our clients vary in size from self-employed sole traders, small enterprises and medium-sized businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.