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Your Money > Tax Articles > Let s talk...
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By Naomi Caine
HM Revenue & Customs (HMR&C) has sent out more than 9m self-assessment returns for the year ending April 2006 - and if you want the taxman to calculate your tax bill, you should complete and send the paperwork by the end of the month. You must also get your paperwork in by September 30 if you have one of the newer short tax returns. HMR&C sent out more than 1.5m of the shorter forms for the first time last year to people with straightforward tax affairs. The end of the month is more of a real deadline if you have a short return because you cannot use the form to work out your own tax bill. Costly errors It can pay to let the taxman do the sums. Errors in calculations will cost us more than £300 million this year, according to IFA Promotion. David Elms, chief executive of IFA Promotion, said: "After September 30, the pressure increases on individuals to ensure their forms are completed accurately and in before the final deadline of the end of January, or face substantial fines." Of course, the taxman doesn't always get it right. John Whiting of Price Waterhouse Coopers says: "You should always check HMR&C's calculations and your tax code. But it's a lot easier than working out the figures yourself - not to mention cheaper than paying a tax adviser." With only a couple of weeks to go, you should get started straightaway. You will need to gather together all the documents that detail your incomings and outgoings. So, you will have to dig out the tax certificates from your bank or building society, dividend vouchers if you hold shares, details of any charitable donations, and information about pension contributions if you are self employed. If you are employed, you will also need your P60, which gives your salary, and a P11D, which lists your benefits and expenses. Don't forget that you should declare any offshore income and any gains from the sale of shares or a rental property. Common mistakes Experts recommend you don't leave it too late to fill in the paperwork because you are more likely to make mistakes if you are in a panic. The common mistakes are pretty basic. They include omitting to sign and date the form. Many people also fail to submit the correct supplementary pages. Then there's self assessment "lite", where people don't bother to write the figures in the boxes. Instead they scrawl "information to follow" or "as per accounts" over the form. But HMR&C wants details - and it wants them on the actual return. If the form is rejected, you might not be able to send in the corrected paperwork by September 30. HMR&C cannot then guarantee that it will calculate your bill in time for the payment deadline of January 31. File online If you miss the September deadline, all is not lost. The taxman will still work out your bill if you file your return online. You just have to make sure you file the return and pay any tax due by January 31. If not, you are hit with an automatic £100 penalty and interest starts to rack up on the debt. Online filing is quite straightforward, but you need to allow a bit of time for the registration process. You log onto the website (hmrc.org.uk) and click on self assessment online. You have to register to get a user ID and password. The government will then send you an activation PIN by post within seven days. HMR&C's website has lots of information about self assessment. Visit www.hmrc.gov.uk. Or you can call the helpline on 0845 900 0444. The lines are open 7 days a week, 8am to 8pm. Should you really allow the taxman to work out your bill? HMR&C won't try to fiddle the figures, but it won't try to save you tax either. It is not, for example, going to point out that you could top up your pension to take advantage of the tax breaks, or transfer some savings into your spouse's name to soak up their personal allowance. Click here to visit Yahoo!'s tax section Professional help If your tax affairs are complicated, or if you need tax advice, it is probably best to seek professional help. Most accountants offer some sort of tax advice. You should always check their qualifications and it's best to employ either a chartered accountant or a chartered certified accountant. You can get more information from the websites of their professional organisations at www.icaew.co.uk or www.acca.co.uk. The qualifications should ensure a certain standard of competence. Plus, you should get some protection if it all goes wrong because the professional body will investigate your complaint. Accountants do not always have tax planning expertise. So you might want to look for a chartered tax adviser with the letters CTA, FTII or ATII after their name. They will be a specialist in tax who has passed the examination of the Chartered Institute of Taxation. The website www.tax.org.uk carries more information and will help you find a qualified tax adviser in your area. The charges vary according to the complexity of your tax affairs and the experience and the expertise of the adviser, but you should expect to pay upwards of £50 an hour. If you just want some help to fill in your self-assessment form, then you might be able to save money by contacting one of the various companies that offer a flat fee self-assessment service. Always meet with a tax adviser at the start - it might be a long-term relationship so it helps if there is some rapport. Make sure, too, that you read through any contract or terms of business and be clear about the fees and the charging structure from the outset. It's no good spending your tax savings on professional fees. For more information, visit Yahoo!'s tax section |
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