Tax returns

The client we turned down, and why

One of the first clients this practice took on was in the property sector. He wanted costs included in the accounts that were not, in our view, incurred wholly and exclusively for the purposes of the business.

We explained that we could not put costs through simply because he wanted them included, and when that did not change, we did not continue. It cost us a client in a year when the business was new enough to feel it.

We tell you this because it is the most useful thing you can know about who prepares your return. A tax return is approved by you and submitted in your name, and you remain responsible for the return you approve. An accountant willing to put through whatever they are asked is not removing that responsibility from you.

What we will do is make sure everything you are properly entitled to claim is claimed, which is a different thing and, in practice, is where most of the money actually is. Poor records are what usually stand between a business and a claim it was entitled to make.

Corporation Tax and the CT600, for limited companies

The company tax return, the CT600 and the Corporation Tax calculations, all prepared from the year-end accounts rather than as a separate exercise. Doing both in one place is deliberate. The tax computations reconcile the relevant figures in the accounts to the figures reported in the Company Tax Return, and tax adjustments mean the accounting and the tax figures will not necessarily be identical. What that reconciliation depends on is both being built from the same records, which is exactly what stops being true when two parties prepare them separately.

Where a company is owner-managed, how money is taken out of it, as salary, as dividends, or through the director's loan account, changes what is due and when, and the return has to reflect each of them correctly. Deciding which mix suits you is planning work rather than compliance, and it is not something this practice advises on. Where you want it looked at, we work with tax advisers who do that and will refer you to one.

Self Assessment, for sole traders and individuals

Self Assessment returns for the self-employed, and for individuals with income that has to be declared alongside employment: rental income, dividends, savings interest above the relevant allowances, capital gains, or income from a second source.

Whether a particular expense is allowable depends on the facts and on whether it was incurred wholly and exclusively for the trade. Some costs are clearly allowable, some are apportioned between business and private use, and some are not allowable however much they feel like a business cost. We apply those rules when preparing the return and explain how each cost has been treated and why, and where the position is genuinely arguable we say so rather than present it as settled.

If you work in construction and have had CIS deductions taken from your payments, those are reclaimed through this return. See the CIS page for how that works, because deductions suffered and never reclaimed is one of the most expensive quiet mistakes in the trade.

The HMRC letter you have not opened yet

This is the part people put off, and it is the part that gets more expensive for being put off.

We deal with general queries and help you respond to HMRC letters, review what HMRC's records actually say against what your accounting records say, and liaise with HMRC on your behalf where we are authorised to. Where the two sets of records disagree, and they often do for mundane reasons like a payment allocated to the wrong period, resolving that is usually a matter of establishing the facts rather than arguing about them.

Where penalties have been charged, an appeal may be possible depending on the circumstances and whether there is a reasonable excuse, and there are time limits that apply. We cannot promise an outcome, and anyone who does is telling you something they cannot know. What we can do is deal with it promptly and in the right form, which is where most of the difference actually lies.

Why we would rather do this in good time

Leaving a return until close to the deadline reduces the time available to resolve queries or obtain missing information. The arithmetic does not suffer, but there is no room left to ask you about anything unclear, to chase a missing document, or to do anything other than get it filed.

Preparing it early also tells you what you owe long before you have to pay it, which is the single most useful thing a tax return does for cash flow. We wrote about the run-up to the deadline in what actually happens before the Self Assessment deadline.

Tax work we do not take on

We do not provide audit or advisory work, and we do not take on businesses with complex specialist taxation needs. Those are real limits and we would rather state them than discover them halfway through your return.

We also will not take on aggressive or unjustifiable tax treatment. If what you are looking for is somebody to take a position we do not think is supportable, we are the wrong practice, and saying so early saves us both time. Where something genuinely is outside what we do, we work with tax advisers and other accountants and will point you to somebody who handles it properly.