Top tips for freelancers about to file their tax return

There are many potential advantages to freelancers who file their tax returns online, but some self-employed people still prefer to complete their self-assessment on a paper form.

Whatever your preference, hefty fines await those individuals who don’t file on time. To this end, or rather to avoid it, accountants have rightly been issuing reminders in light of the deadline for offline, paper-form fillers fast approaching.

But as those warnings were in some cases sounded as far back as early September, Emily Coltlman ACA, chief accountant at FreeAgent, a provider of online accounting suites for micro-businesses, offers five top tips to self-employed people who self-asses on paper but are (still!) yet to send it to HM Revenue & Customs.

Do it quickly!

If you file your tax return online, you have until January 31st to do so.

However, paper returns must be filed by October 31st - unless HMRC sends you a notice after July 31st telling you to complete your tax return. Most notices are usually delivered in April but sometimes HMRC doesn’t manage to do this for everyone.

If you do receive your letter after July 31st you have three months from the date on which you received the letter to file your paper tax return.

But remember that if you’re late filing your return, even if that’s only by a day, you will pay a penalty - even if you don’t owe any tax. And the penalty isn’t limited to how much tax you owe: the later you file, the more you’ll pay!

You’ll need to work out your tax

If you file your tax return online, either using HMRC’s own software or commercial software, that software should work out the amount of tax you owe.

If you prefer to complete a paper tax return by hand, you’ll have to calculate your tax – and believe me, I’m a qualified accountant but I would never attempt to do that. So only do this if you’re really confident of your tax calculations.HMRC expect you to work them out correctly and they will charge interest and penalties if you get it wrong and don’t pay enough tax.

You can, though, get round this if you have a computer but don’t have access to the Internet. You could use dedicated software, such as TaxCalc, to prepare your return; then print it out. But be careful if you’re doing this, because…

You must format the form correctly

HMRC have said that they expect paper returns to be submitted using the actual form which they send to taxpayers who have previously filed their return on paper.

However, if you have access to commercial tax software but don’t have internet access, HMRC say that in practice they will accept paper forms completed using commercial software and printed out - so long as these forms are “identical in appearance” to the paper form they provide.

Therefore, make sure you follow their guidelines and remember that your form must be printed in colour or grayscale. If you print it in black and white, HMRC will reject it.

Don’t forget to sign and date

If you’re completing your return on paper, don’t forget to sign and date it - or HMRC will also reject it.

Only make certain annotations

You shouldn’t write anything on your tax return such as “per accounts” or “to follow”.

If you’re a sole trader or in partnership, the Revenue don’t see your accounts anyway. All they want, unless they investigate your tax affairs, is your tax return.

And if you don’t yet have all your figures to hand, then you need to wait until you do, or, if that would mean you miss the deadline, put in estimated or provisional figures.

In that case you should put a note to HMRC in the “Additional information” box.

And finally…

Following these top tips should help ensure you stand the best chance of filling your paper tax return correctly and on time. And as those who have received late-filing penalties in the past will tell you, tax really can be taxing, so don’t delay; get on with your submitting your tax return today!


24th October 2012

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