January is always a very busy month for accountants, dominated primarily by the need to ensure that clients’ personal self-assessment tax returns (SATRs) all get filed by the 31st at the very latest.
Of course, most accountants neither want nor expect to do all the SATR work in the last few weeks before deadline day. Their offices will have been humming with this activity since the leaves started to turn yellow a few months back; but there are always a few clients who, for one reason or another, just don’t provide the information until the last minute.
Maybe it’s just a coincidence, but we often find that it’s these same clients who also seem to bring a few surprises with them whenever we do eventually manage to pin them down and remind them that if we can’t file their SATRs on time, they’ll be facing instant fines.
These are the sort of clients who ’forgot’ to mention little things like the additional directorship that they took on during the past year as a favour to a friend; the buy-to-let property that they acquired jointly with a relative; the few hundred new shares that they bought when there was an interesting public flotation on the stock market; or just the odd savings account that they opened somewhere. Now these are the sort of surprises that no accountant likes, especially in January. Just when we think that we’ve got all of the relevant information in good time to do the calculations and file the returns, we find these ’little things’ suddenly popping out of the woodwork.
In many cases, clients really seem to believe that some or all of these little surprises have no relevance to the tax returns that we’re preparing for them. They forget that everyone now lives in an interconnected world.
Whether it’s becoming a company director, buying a property, buying shares or just opening a savings account, somewhere there’s an ’official’ record of the transaction. That record will, eventually, be visible to the tax authorities.
And if there’s one thing that worries accountants even more than one of these surprises from a client in January, it’s finding some of the same information coming from the Revenue a couple of months down the line after the returns have gone in with nothing except a single source of income.
Not only is it professionally embarrassing, it raises doubts about the credibility of all of the information ever provided by that client. Even worse, if there’s a doubt about the reliability of one client’s return, what does that imply about the reliability of the other returns submitted by that accountant? Better that any ’surprises’ however unwelcome or awkward come from the client before their return is filed.
The self-assessment return is supposed to provide complete details of all your income, from whatever source. If you’re self-employed (ie a sole-trader or partner in a business) that means the profit (or your share of it) from that business during the tax year in this case up to the 5th April 2013. If you’re a director and/or shareholder in your own business, it means your salary, any dividends that you paid yourself out of your company and any benefits-in-kind that the company provided to you in the same period a company car or fuel paid by your company, for example. Despite years of advice about the general tax-inefficiency of company cars and especially company fuel accounts, it’s still quite common in the petrol retailing business for retailers to obtain almost all of their fuel ’free’ from their own site. Now in general, if he or she has been preparing the business accounts for you, your accountant will already have this information. They will try to ensure that what goes into your SATR matches what they put on your P60 and your P11D for that tax year, or what they declared as your profit in any sole trader or partnership accounts. That bit is relatively straightforward.
the onus is on you
The other stuff property income, buying or selling of shares etc will only be known to your accountant if they were involved in advising or setting up any of the deals, or if some of the financial transactions happened to go through the main business for which they produced the accounts. In many cases, these transactions are made through personal bank accounts rather than business ones, hence they don’t get picked up by accountants working on the business side. This is where the onus is on you. If your accountant hasn’t been involved in your other activities, you need to tell them and provide backing documentation. You’ll need to provide details of any commercial property (including ’buy-to-lets’) you’ve purchased or sold, whether on your own or with another person. If you’re involved in renting out properties then you need some form of income/expense or profit/loss calculation for that activity covering the relevant tax year. If you’ve been trying a touch of property development there’ll be Capital Gains Tax (CGT) computations to prepare. The same goes for any shareholdings that you have. Apart from providing any dividend warrants, you’ll need to let your accountant have details of any shares bought or sold during the tax year again they will need to undertake a CGT computation.
Perhaps you’re one of those people who’ve suffered a small twinge of guilt or nervousness every time you’ve seen one of the self-assessment reminders about that property you bought years ago but haven’t ever really made any money out of, so you’ve never mentioned it; or those shares that you’ve had for years but which have only provided a small dividend so you haven’t bothered declaring them before. If so, you still have a couple of weeks in which to unburden your conscience. Talk to your accountant before they have to file your return, and remember this isn’t the time to withhold financial secrets from your accountant.