Every year, accountants across the UK brace themselves for the inevitable surge in demand for self-assessment tax return services over the winter months. Notifying your clients about the benefits of filing a return early can help smooth this peak. It also provides better peace of mind that your clients are on top of their tax liabilities and able to avoid the inevitable fines and penalties from HMRC for late filing or payment.
HMRC has been particularly active this summer, contacting tax agents and accountants via their regular newsletters to encourage taxpayers to file their 2022/23 tax return well in advance of the 31 January 2024 deadline.
This guide provides practical advice for accountants to notify their clients about the benefits of filing their 2022/23 self-assessment tax returns as early as possible.
HMRC systems are difficult to access during peak times and are often restricted
HMRC continuously reviews arrangements to maintain the Agent Dedicated Line (ADL) used by tax agents and accountants to resolve any issues they have with a client’s personal tax position. Between 17 April and 2 June 2023, access to ADL was restricted with HMRC only responding to questions about late filing penalties and tax codes. From December until the end of January, the ADL is usually reserved for ‘high priority’ calls and waiting times to speak to an HMRC operator are often excessive (averaging 28 minutes in December 2022).
If you need to use the ADL to progress your client’s tax return, the peak months of April, May, December and January should be avoided. Notifying your clients about the restricted access and extended waiting times to speak to an HMRC operator can focus their minds, particularly where their tax position has changed or complex disclosures are needed.
Filing a self-assessment tax return early does not mean the payment is immediately due
When you file a self-assessment tax return on behalf of your client, any liability arising must be paid by 31 January. By filing the return early, your client has more time to set aside funds to meet the liability or discuss with HMRC any amendment needed to their tax code. They may also be able to set up a budget payment plan with HMRC to make weekly or monthly payments.
If a rebate is due because tax has been overpaid, then the rebate is usually paid immediately into your client’s bank account, helping their cash flow. You may also be able to negotiate with HMRC to reduce your client’s future payments on account if their income is changing.
The risk of fines and penalties is avoided
Notifying your clients about the consequences of failing to file a tax return or pay a liability when due helps raise awareness about the direct financial impact on them when they fail to meet a deadline. With immediate fines for late submission of £100, and further penalties for failing to file or pay a liability, your clients will appreciate your call to action. HMRC can impose penalties of up to 100% of a tax liability if they believe a taxpayer is deliberately avoiding payment. HMRC can also estimate a tax liability if they believe the filing of a return is unnecessarily delayed.
If your client can’t pay in full by 31 January, they may be able to set up a payment plan without speaking to anyone at HMRC, by using the online self-serve ‘Time to Pay’ facility. There are strict criteria to use this service and your client will still need to pay interest on any outstanding balance. Accountants should urge clients to pay any debt as quickly as possible, while making sure payments are affordable.
When a self-assessment tax return is filed it provides proof of income
If your clients are self-employed they will often need comprehensive proof of income when applying for a mortgage or loan from a financial institution. When a return is filed, your client can use the calculation as proof of income which will usually be accepted by most financial institutions. It also assists your client when applying for any government benefits or tax credits.
Accountants can reduce their workload in December and January
With accountants working flat out to support clients over the winter months, any action taken to bring forward work will provide significant gains. Many accountants use flexible pricing models to offer a reduced fee for self-assessment tax return work in the summer months and charge a premium for services in December and January. Clients welcome the opportunity to reduce their fees and to ensure their personal tax affairs are in order with an early submission, allowing them to focus on their own businesses.
Accountants who delay their self-assessment work usually work long hours and weekends, paying staff overtime and higher rates to address the peak of work they may have inadvertently created. The adverse impact on staff morale and profit margins can be significant, and the risk of operational failure and poor client service is increased.
How Initor Global can help manage your self-assessment tax return workload
Accountants gain many advantages by outsourcing personal tax services to Initor Global, leveling the playing field with larger competitors and freeing capacity to work on upselling services. We understand the complexities involved in preparing a self-assessment tax return and we have dedicated professionals to help you.
Ensuring compliance with HMRC’s rules can be daunting, and penalties can be excessive if a deadline is missed or incorrect information submitted to HMRC.
Our team of qualified tax specialists and accountants provide the self-assessment tax return preparation services your clients need, with our rates typically 50% less than the equivalent service in the UK. All services are delivered to the highest professional and quality standards your Practice expects. Many of our accountants and tax specialists trained and worked for Practices in the UK.
We price our services based on the complexity of the work involved, from simple returns involving salary and dividends, through to the most complex where specialist tax advice, such as capital gains or foreign income, may be needed. Our services are completely flexible and can be scaled to meet your Practice growth plans or peaks of work.
If you are looking to take your Accounting Practice to the next level, and provide effective personal tax services while reducing costs, you can arrange a free consultation with our expert team.
We offer a free, no-obligation trial of our personal tax services.
You can also call us on 0203 519 2121.
This guide draws on information published by HMRC and other professional bodies. Information may be subject to change and Initor Global accepts no responsibility should you decide to rely on the information we have published in this blog. Professional advice should always be taken as necessary based on your individual circumstances.