Monday 14th February 2005 sees the end of the two-week extension given to small business owners to file their tax returns, introduced after the collapse of the Inland Revenue website in January 2005. Following this year ís deadline confusion, cash flow specialist Bibby Financial Services is urging the Government to review the way in which small firms are required to make tax payments.
David Robertson, chief executive of Bibby Financial Services, said: ìThe current deadline falls very early in the year, which is often a peak trading period for many businesses. Putting the deadline back a few months, or allowing the self-employed to file tax returns within six months of their accounting date, would make it easier for firms to get their paperwork completed on time. Spreading the flow of tax returns more evenly through the year would reduce the strain on both UK entrepreneurs and Inland Revenue staff.î
Each year about 10% of the 9.5 million who must complete a self-assessment form miss the deadline and incur a 100 fine - last year the Inland Revenue issued 890,000 late payment fines, worth a total of 8.9 million.
While reforms to the deadline dates would undoubtedly relieve the pressure placed on British entrepreneurs, there are however some simple steps small business owners can take to plan ahead and minimise the headache of tax returns next year.
Remember the benefits of filing your tax return online
Donít be put off by the recent problems, it is a safe, secure and convenient option - just donít leave it until the last minute! The Inland Revenue processes internet returns faster than paper ones and the automatic calculation of your tax means you know immediately what you owe or are owed
Keep a copy of what youíve submitted this year
Photocopy your tax form and any other paperwork that youíve submitted. As well as providing details for reference over the next 12 months it will be a useful comparison for when you come to do it all again in 2006
Donít throw away paper work
You need all your financial records to complete a self-assessment form so make sure you hang on to them. Store documents such as bank and building society statements, business earnings, expenses or accounts in a secure place
Keep a note of all income
Even if itís income thatís taxed at source (such as bank interest, dividend payments and state pension) youíll need to keep record of it. But leave off income or gains from tax-free accounts such as individual savings accounts
Ask for help
If everything is getting all too much and the deadline is looming, remember help is at hand. Hiring an accountant, even for a limited period of time, can de-mystify taxation ensuring you are compliant
David Robertson concludes: ìSmall businesses shouldnít bury their heads in the sand when it comes to tax returns. While weíre calling for the Inland Revenue to adopt a more flexible approach in the longer term, in the interim some careful management can help reduce the pain.î
Inland revenue must do more to reduce tax deadline pressure
Bibby Financial Services calls for tax reforms
