The Importance of Filing a Tax Return on Time

Although we have passed the deadline for this year’s tax returns – 31st January – it is still important to understand what a tax return is, how to file them, and why it is so vital to file them promptly and accurately when running a business. In this insightful article, we are going to be guiding you through the importance of tax returns and submitting them on time.

For business owners, trustees, executors of an estate, and the self-employed, it is a legal requirement to correctly complete an HMRC Self-Assessment Tax Return. You could also be required to complete a tax return if you have other untaxed income like an income from renting a property or money from savings and investments. If you have overpaid your taxes, you will receive a repayment from HMRC and if you are aware that your taxable income will be decreased, you are advised to decrease your funds on account.

Making sure you have your taxes paid and filed on time is a green flag for HMRC and shows your employees, clients, and future investors that you are organised and can run a business professionally. If you’re looking to apply for a credit card or a loan in order to grow your business, whether you need supplies or investing in something expensive, it is majorly important that you keep a record of each payment that goes out so you can show what you spent on your business during the tax year. This will give the bank and institutions involved in tax returns a clear idea of your financial gains, losses, and your current circumstances. It will also give them a clearer indication into what capability you are at to pay back loans or credit cards.

If you file your tax return early or on time, that is a great way to show professionalism and organisation, and you can continue business as usual. However, missing the deadline can incur a financial penalty! There are multiple different penalty brackets depending on how late your returns are. Here are the penalties that the HMRC will give you if you fail to submit your tax return:

  • 1 day – 3 months late you will be faced with a £100 fine
  • 3 months late you will be charged £10 a day for up to 90 days
  • 6 months late you will be faced with 5% of the tax liability or £300, whichever will be a larger payment

Submitting your tax returns can be a time-consuming process, if you would like some professional advice and guidance to help you submit your HMRC Self-Assessment tax return, please don’t hesitate to get in touch with our team of fantastic team of accountants! For more information about the best accountants Manchester has to offer, head on over to our website.

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