Don’t Put Off Until January What You Can Do In July…
It’s February again, and many an accountant and tax advisor is heaving a sigh of relief that another self-assessment deadline has passed. The month of January often puts extra pressure on accounting professionals as they endeavour to submit eleventh-hour returns before the end of the month to help their clients avoid penalties and interest on tax paid late.
Of course, you don’t have to wait until the end of January to complete your accounts or file your self assessment return. It can be done any time after the start of the new tax year and your accountant would undoubtedly prefer to receive your books sooner rather than later.
Most businesses should be in a position to provide the information to prepare accounts after 3-4 months following their year-end, and there are advantages to completing your accounts and self-assessment return early in the tax year:
- You can keep a closer eye on how your business is doing and take steps to rectify any issues which crop up. This could include chasing aged debtors, resolving disputes or even deciding when to purchase fixed assets to maximise tax allowances.
- If there are any queries on your books, you will have a better chance of answering them if transactions for that year are still fairly fresh in your mind.
- You will know how much your tax liability will be that much earlier. so that you can budget better for payment. If your profits are less than in the previous year, you can also make a claim to reduce your payments on account to a level which is more in line with your liability.
- HMRC have a time window during which they can question anything on your return. This window is twelve months following the date of submission – so the earlier you get your return filed the sooner the window is closed.
Don’t worry – submitting your return earlier in the year doesn’t mean you also have to pay your tax earlier. You still don’t have to settle your liability until 31st January following the end of the tax year.
So why not make a New Tax-Year resolution to get your bookwork done, your accounts prepared and your return filed as early as possible. You will make your accountant so happy!
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.