Alan Masson, head of tax at SBP Accountants and Business Advisors of Aberdeen, Peterhead, Fraserburgh and Banff, takes a look at the importance of completing tax returns…
OWNING and running the daily operations of your own business is extremely hard work, and adding the management of your accounts into the equation can create a real nightmare.
With HM Revenue & Customs New Year tax deadlines fast approaching, as a business owner it is vital to start getting your accounts in order to avoid an unwanted visit from the tax man in 2016.
This year’s online tax returns for the year ended 5th April 2015, must be completed by midnight on 31 January 2016 – or you could be facing a very unhappy New Year.
The preparation of annual tax returns is time-consuming for any business owner, making it important to organise records throughout the year.
Firstly, it is vital to keep anything and everything relating to your business as it is much better to be safe than sorry. Theoretically, HM Revenue and Customs can check everything, so you should take care and keep records of all documentation relating to your operations.
If you are a UK taxpayer, you should keep a record of the tax you pay each year and other records relating to your income and outgoings. You’ll need these to help you complete your tax return or to answer any questions from HMRC about a return you’ve already completed.
If you have to send HMRC a tax return, you should keep all the records and documents you need to enter the correct figures. If HMRC needs to check your return, they may ask to see the records you used to complete it – if you don’t keep your records for long enough, you may have to pay a penalty.
Make sure you keep interest, dividends or other income from UK savings, investments or trusts. You should keep all interest certificates, bank statements and dividend vouchers.
You should also keep details of exceptional amounts you’ve received – for example, an inheritance or other windfall.
If you get income from letting out a property, you’ll need to keep details of the rents you’ve received and the expenses you’ve paid.
Foreign income or gains and Capital Gains Tax records should also be kept. It’s a good idea to keep any records associated with an asset you’ve owned in case you make a gain or loss when you sell, give away, transfer or exchange it.
If you are guilty of sorting out your financial information at the last minute, it is worth considering introducing a simple weekly or monthly system. If you are tackling issues and filing your documents regularly, your annual accounts and tax return won’t be such a daunting task.
The chances of being selected for a random check by the taxman might be slim but business owners shouldn’t risk getting a hefty fine.
SBP offers a variety of business and accountancy services, including personal and business taxation, as well as a dedicated business services department to cover everything including bookkeeping, VAT and payroll requirements.
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