Self Assessment Tax Return for sub contractors – 5 Common Mistakes to Avoid
Self Assessment tax return is a document or form that every business honour sends to HM Revenue and Customs (HMRC) each year to report how much they have gained and from what sources. The self assessment tax return is a system on which HMRC uses to collect income tax. While filing a tax form, people usually make errors, but these errors can lead to severe investigation or penalties. You can prevent yourself from penalties by avoiding these common mistakes.
Not petitioning for a UTR number
Well, you need a unique tax reference (UTR) number to file a tax return online. It is a ten-digit reference number that recognizes you to HMRC. You can find it in every letter you receive from HMRC on which you send a return to HMRC. If you are petitioning a UTR than apply for it with plenty of time because it will take HMRC up to 6 weeks to issue a UTR to an individual. In case you miss the deadline, then you will suffer a penalty. Also if you have your UTR number then be accurate and double-check it while filling the form for self assessment. Professional accountants like BNW accountants in Morden can help apply your tax affairs.
It is quite crucial not to omit your capital gains on additional pages. Taxable money includes earned income and unearned income that constitutes a latent tax obligation. You should declare your relevant income. Unearned income comprises of the following categories:
- Profits derived by assets sold (like a car or an asset sold for a profit on eBay or any online sales site.)
- Maintenance payments and child support.
- Social Security and Medicare benefits paid by your employer.
- Severance pay.
- Rental income from personal property.
- Capital gains
- Stock dividends.
- Bonuses and rewards (like trips paid for by your employer.)
- Unemployment benefits and other federal and state financial benefits.
- Cancelled debts.
- Lottery winnings.
Failing to declare charitable giving
Do not forget to declare the money if you have given it to the charity as it could help reduce your tax bills.
Not keeping records
You can face financial penalties because of improper record keeping. In case HMRC raises an inquiry into your tax affairs. Before filing a company statutory accounts, you should have clear and complete account details in hand. After the submission of the relevant self assessment tax year keep your record for at least five years. You can keep your records on paper or digitally, it is up to you how you keep your records. You can use some help from cheap self-employed accountants as well. HMRC can command you a sentence if your documents are not valid, intact, and precise. Accountancy plays a vital role in running a business, you must be responsible for it, that is why I recommend, prestigious, and professional sole trader accountants in London.
Missing the deadline
Do not wait to file your self assessment tax return for sub contractors until the last date or deadline. If you meet the deadline, then automatically you will be fined £100, and the penalty increases over time.