How to avoid common Self Assessment tax return mistakes

Mark Williams: Hello, and welcome to the fourth episode of a brand new podcast called Tax Tea Break with Go Simple Tax. It's a six-part podcast series where I speak to tax and Self Assessment experts who offer free time and money saving tips for soul traders, private and landlords, and others who pay UK tax via Self Assessment.

My name is Mark Williams and I'm your host. Hopefully, you've made yourself a nice cuppa. Now each 20 minute episode will have its own subject, and in this our fourth we'll be talking about how to avoid common Self Assessment tax return mistakes. Now we all make mistakes, and if we're lucky, they're small ones that we can quickly and easily put right, but some mistakes later turn into a headache that can end up costing those time and money.

And that can include your annual Self Assessment tax return. So what are the most common Self Assessment tax return mistakes, and how can you avoid making them? In this episode, you can find out, but before I introduce today's expert, let's find out about Go Simple Tax and how it could benefit you if you pay tax via self-assessment tax returns.

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Mark Williams: It's time to introduce our experts. Aiden Corcoran Self Assessment who's a personal tax senior at Go Simple Tax.

Aiden's worked as an accountant and tax advisor for more than 10 years. He's plenty of experience at Self Assessment tax returns, and the mistakes that sole traders, landlords, and others make. Aiden, welcome.

Aiden Corcoran: Hi, Mark, thanks for having me.

Mark Williams: Now we all make mistakes, don't we? Aiden, from time to time and Self Assessment tax returns are no exception.

What are the consequences when people make mistakes in their Self Assessment tax returns?

Aiden Corcoran: Well, really the main ones that people usually do is either missed a filing deadline whereby you'll have a penalty for that, or they'll miss the payment deadline where again, you end up having penalties for. So they're the two main ones.

But you also have them for mistakes. And, um, the mistakes do sometimes turn costly depending on whether it was a careless action. However, it was deliberate.

Mark Williams: So what, what, what type of penalties are we looking at for those Aiden?

Aiden Corcoran: Yeah, so the maximum penalty for, um, a careless mistakes, so to say is 30% for a deliberate but not concealed.

Is 70%, and then you've got a deliberate and concealed, whereby it's a 100% and that percentage is actually the, um, potential loss revenue from HMRC. So it can be quite hefty if you are being deliberate and concealing any, uh, income.

Mark Williams: Indeed. Okay. So obviously the, the, the point to make is it, it pays really to not make these mistakes and try and get your Self Assessment tax return right first time?

Aiden Corcoran: Pretty much. Make sure you get it done first time and make sure that. Pretty much well planned their head. Um, there's no point in, uh, rushing it and making these mistakes and then worrying whether you're gonna get checks on or caught out.

Mark Williams: So let's look at the reasons then why people make these mistakes, and is it often down to lack of knowledge and experience?

Say you haven't really done that many tax returns in the past.

Aiden Corcoran: Yeah, usually it's people becoming self-employed or having to do a tax return for certain reasons, and then them not reading up about it and just assuming that it's gonna be easy.

Mark Williams: And the more that you do them, then you build that experience and then it becomes less problematic, doesn't it really, the more that you do them?

Aiden Corcoran: Yeah. Provided that your finances are the same each year. Then usually you should get used to it. If you've got new things or you've got certain claims that you have in this particular year, then perhaps there needs to be more reading done on them. But for the, uh, year to year things such as just completing the self-employed pages, for example, then yeah.

It should start becoming a lot easier as you go up, get more experience in it.

Mark Williams: And if we're being honest, I mean, people failing to keep the keeping organized, financial records failing to keep their expenses well organized. These are other reasons why people make mistakes. It's disorganisation, isn't it?

Aiden Corcoran: Yeah. So it is basically people thinking or not thinking when they're purchasing things during the year, and then it comes to the end of the year and you don't know what you purchased. So being well organised, Tracking things during the year, then you can stay more organised and you won't, you won't get things wrong on tax tech return.

Mark Williams: And obviously technology apps and software can help when it comes to managing your expenses and can certainly help when it comes to keeping financial records. And so, so that, that might be something that people should look into, uh, the role that software can play in helping them.

Aiden Corcoran: Yes, exactly. And record keepping thing that I should mention is record.

Some people don't do it. It is a requirement by HMC and um, the maximum fine for each breach of not keeping records is actually a uh, 3000 pounds. And that's each breach as well.

Mark Williams: Yeah. So, so it is a legal, a requirement when you're running a sole trader business that you've gotta keep up to date accurate financial records detailing your income and your expenses.

Aiden Corcoran: Yes. Uh, yeah. Keep all your receipts paper. Whether that's electronically or um, in. It's up to you.

Mark Williams: And, and another co common problem is that people just don't leave themselves enough time to complete their annual tax return. It's a classic sort of picture, really, you know, in January, sole traders battling against the online filing deadline the 31st of January to get their tax return done.

The oven left themselves enough time and, and that's when mistakes can happen when you are rushing to get through it, isn't it?

Aiden Corcoran: Yeah, exactly. Usually people do wait towards deadlines and then, um, struggle. So it's, it's normal for us to be busy in January, but people should really look at it, look at it and say it doesn't actually need to be done so late.

Mark Williams: No, and and in fact, it's something that people aren't always aware of. They can actually do their tax return for the previous tax year as soon as that tax year ends from 6th of April on onwards. You don't have to wait until, uh, January, December. It can be done much earlier, can't it?

Aiden Corcoran: Yeah, exactly. HMRC much the day after the end of the tax year at hm open up the servers and then you can submit that previous tax year.

Don't rush to go out to submit in April. You've, um, can wait until May and make sure you've got everything in there, just double check it over for everything.

Mark Williams: And then you don't have that, that mad rush come December, January when you could be doing other things. It's already done in dusted and you can pick your own time, you can do your tax return at your own leisure, you know, in, in good time.

And that's, that's another, another good tip. Really.

Aiden Corcoran: Yes, exactly. I'm doing it. Means that you know what your tax liability will will be for, that'll be due in January. So even submitting in April or May, you don't have to pay until January. So,

Mark Williams: okay. And, and when people do complete their Self Assessment tax return, natural, not, not many people enjoy doing tax returns.

Aiden Corcoran: Well, maybe, maybe accountants like yourself, but, but the rest of us don't. So, so people kind of, there can be a tendency to rush. You want to get the, get it done and dusted as soon as possible, but, That's where mistakes can happen. You've gotta set yourself enough time to look at your, um, tax returning and get it done in good time, haven't you?

Yeah, pretty much what I just said then don't rush to get it done in April. It's obviously, yeah, I've got the deadline in January. So if you are in a position where you're thinking, ah, I'm ahead of the game here, there's no point in getting it in as soon as possible. Make sure you just take your time, look over everything you've done and just double check all entries, basical.

Mark Williams: Yeah, I think, I think I read somewhere. I think on average it takes between, I think it's about three hours. Do you reckon the average person takes about three, three and a half hours to complete a Self Assessment tax return between three and five hours. So it's that type of time really that you need to dedicate to the taskers now, or maybe split it over a couple of days.

Aiden Corcoran: Yeah. And at the same time, That's probably just solid working on your tax return, you then have to take into account if you've got loads and loads of receipts here, there, and everywhere, that probably increases the time as well.

Mark Williams: Yeah. Okay. And, and that touches on a a very important point. You know, if throughout the year you, you you're working with, um, uh, accounting software and, and your.

Putting in all your Inc. Detailing all your income, detailing all your expenses and costs, then when it does come time to fill out your Self Assessment tax return, all those figures are, are nicely summarised for you. So it makes filling out your Self Assessment tax return, uh, not only easier, but it makes mistakes less likely as well, doesn't it?

Aiden Corcoran: Yeah, exactly. And like I mentioned before, that real time tracking of expenses and income, it is such a relief if you are using accounting software, it makes things so much simpler. And as you're going throughout the year, you can sort of see where you are at in terms of whether you're making a profit, whether you're making a loss.

Mark Williams: And also it is just good discipline, isn't it? Just the end of the month, you know, it could be the end of the month. You say, okay, well you set time aside that you'll go through your expenses, itemise it all in your, in your software and the job's done, then it's it's out the way.

Aiden Corcoran: Yeah, exactly. And then you don't have to, um, worry about that in the future.

Mark Williams: And, and, and obviously another mistake that sometimes people make in their Self Assessment tax return. They fail to claim for all of their allowable expenses. So, and because they don't do that, they end up paying more tax than they they should do, don't they?

Aiden Corcoran: You have expense that, that is wholly and exclusively for the purpose of the business, then make sure it gets claimed.

Mark Williams: And I know on the Go Simple Tax website, there's quite a lot of content on there about the expenses that, um, sole traders and landlords can claim for the, the allowable expenses and.

Aiden Corcoran: There's, sorry, there's multiple blogs on that sort of thing.

Mark Williams: So you make sure all that's entered in your, in your tax return, so then that your tax liability, your tax bill is correct.

Then when it comes through,

Aiden Corcoran: uh, or as low as it can be.

Mark Williams: Uh, and another classic mistake is that people sometimes for often for vote fairly, um, innocent reasons, they don't realize that certain sources of income. Are taxable so they don't include certain income sources in their tax return. So obviously it's important when you're filling out your tax return to make sure that all of your taxable income is, um, is detailed within your tax return.

Aiden Corcoran: Yeah, so a funny one that I always get is when people are completing a tax return and they have self-employed income as well as employment income, I will look at that tax return and be like, So you've just got yourself employed income and they're like, oh no, I've got employment as well. And I'm like, oh, where is it on your tax return?

They go, oh no, it's taxed at source. I don't need to, um, include that I'm a tax return. The amount of times that you have to explain that the tax return is a whole picture, um, of all income rather than just the things that haven't been taxed. So yeah, a lot of people. Um, I know I've, um, submitted previously just the self-employed pages, and then they, um, question why they get a calculation in the post from HMRC including that employment income.

And then, then they've got a much higher tax bill.

Mark Williams: So it can be other things, can't it can be pensions, it can be share payments. There's, there's lots of things. And, and there again, you know, if. Anybody is in any doubts about what sources of income are taxable, they should seek advice or, uh, once again, sort of visit the Go Simple Tax website and look at the blog content on there that will tell them.

Aiden Corcoran: Yeah.

So yeah, it's not just the employment and self-employed income, it's sort of thoughts as you say, it's, um, pensions, property. Trust income. Yeah. Partnership income. There's, there's lots of different sort of, um, taxable income, so it's worthwhile either visiting HMRC or as you say, visiting some of our go simple taxes, blogs.

Mark Williams: And, and another classic mistake is not including supplementary pages.

There's a main tax return, the SA 100, but. For certain sources of additional income that are separate supplementary pages, tax return pages that need to be filled in as well and, and, uh, and filed with the main tax return. Yeah, so that ties in with my, um, answers to the previous, uh, question there with the people forgetting the employment, SA102 schedule on the tax return because they don't think they need to do it.

Aiden Corcoran: But yeah, it's worthwhile reading through HMRC help notes. They are quite helpful. Um, I've found myself, I didn't previously use them up until fairly recent and then I've started reading through them and I'm like, oh yeah, actually it does help quite a bit. Whereas people just, um, as I say, try and wing it and, um, think they know best, whereas an actual fact, take a step back, spend a little bit more time.

Read through the, um, help notice and they can be rather useful, especially with making sure that you answer all the questions.

Mark Williams: I suppose even just reading the tax return when you're filling it out, if you show enough diligence, then you don't end up entering the wrong figures in the wrong box or ticking the wrong boxes.

It, it takes a, a. Concentration doesn't attention to detail really, when you're filling it out.

Aiden Corcoran: Oh yeah. definitely takes concentration.

Mark Williams: Many people now are using Self Assessment filing software, obviously go simple tax. That's that's what you guys do. How can that help to prevent mistakes?

Aiden Corcoran: You've got tracking of all the expenses which are ordered on the screen.

So if you are. Potentially entering our, um, dual entry for a particular expense. It'll stop duplicating those sort of things. And it also allocates where to go on, um, where to put the income or expenditure on the tax return in the correct boxes automatically from easy to use dropdowns. So it's, it's more of a guidance or of software to completing your tax return, which sometimes are quite a lot actually on support.

We do get questions in regards. Which box does this go into and all that sort of thing.

Mark Williams: So it provides

not a, I mean, you make a good point there. There's prompts within the software that helps to prevent you making mistakes. But if you've got any questions or any doubt over where things could go, support as part of your package, people can get in contact and, and get that advice.

Alright, Aiden, so sort of as a final point, and I know it's something that you personally do as well for a fee, people can get their Self Assessment tax return checked by an expert. What are the advantages of that? Can that, can that end up saving people money?

Aiden Corcoran: Yeah, a hundred percent. So we do a tax return check whereby people will complete their own tax return and then myself, our member of the team will go in and, uh, check the return.

Create basically

a, a review report, commenting on things that may have been missed, suggesting, um, additional expenses depending on what the person does in their job or, um, self-employed. Basically, from there, we'll make sure that everything's in line for what HMRC would expect. Basically giving you peace of mind that what you are submitting to HMRC is, um, allowable and relevant.

Mark Williams: And, and do you ever sort of make suggestions then to clients about expenses perhaps they didn't know that they could claim for? Can you think of any examples of that? The biggest one from memory that I can think of is, um, someone who had a Tesla and they weren't aware of capital allowances on, um, a hundred percent electric new vehicles and basically, um, bottom line figure.

Aiden Corcoran: they got a refund of 31,000 pounds, well just over 31,000 pounds, which prior to the review, they had no idea that they could, um, actually get.

Mark Williams: Wow. Must have been delighted then that they got you to look at their tax return .

Aiden Corcoran: They actually, um, came back the following year and asked if I could get them the same amount again.

Mark Williams: Yeah, I'm sure they did. Yeah. But sort of more, more usually. I mean even if it was a uh, uh, you know, a few hundred quid saving or whatever, you know, it's still worth, it can be a good investment on it, paying an expert to just look over. And as you say, you make the point, it's about peace of mind as well, knowing that everything is as it should be with your tax return.

So there are no mistakes in there.

Aiden Corcoran: Yeah, exactly. And then you've also got the risk of, um, doing it incorrectly, what we said earlier, where you've got them, um, penalties for careless actions whereby you could potentially have them, um, penalties on top if. Didn't go and have a review, for example. So yeah, even if it's not saving money, it could be saving you penalties.

Mark Williams: All right. Aiden, brilliant stuff. Thank you very much indeed. Um, all that remains is for me today. Thanks for being such a great guest and for sharing your knowledge with us.

Aiden Corcoran: Oh, cheers. Thanks, Mark, it's been a pleasure.

Mark Williams: There we have it. So what are the three key takeaways from this episode? Number one, if you lack knowledge and experience, visit reliable websites to get advice on completing your Self Assessment tax return. That includes Gov UK and go simple tax.com. Two, leave yourself plenty of time. You're more likely to make mistakes if you rush it, which can happen if you're battling the online filing deadline.

Number three, do find out about filing software, which has been developed to make Self Assessment much easier while making mistakes less likely. You can also pay an expert to check over your tax return, which can also help to prevent mistakes. Hopefully, this episode has given you lots of great tips so that your Self Assessment tax returns are mistake free, but you can also head over to the Go Simple Tax website

go simple tax.com for more free advice on Self Assessment and many other tax related topics. Our next episode follows on from this one. Really, it explains how to complete your Self Assessment tax return in six simple steps. Sounds easy, doesn't it? We hope you've enjoyed this episode and that you've learned lots of useful things.

Please tell others, others about our podcast and followers and likers, and share our social media posts because we really do want to help as many soul Trader. Private landlords and expats as possible. Thanks for listening. Until next time.