What happens if I make a mistake on my tax return?

It’s that time of year when, for many small business owners, self-employed professionals and more, the impending deadline of the tax return looms large and heavy. It can be overwhelming for some, but it needn’t set you into a panic. The main thing to remember is to file it. If you’ve been informed that you need to file a self-assessment tax return, then you must file it – even if there is no tax to pay.

What happens if I make a mistake on my tax return
Forms can be daunting and mistakes can happen. If you decide to submit your tax return yourself, there are clear rules, aside from that big red mark in the calendar. That’s January 31st just in case you forgot. Whilst you can amend and resubmit your tax return up to 12 months from the date you filed it, you may find yourself receiving a fine. The self-assessment process can seem complex, but help is out there to help you avoid tax penalties.

Peter Stamps, founder of FD Business shares his tips on the process and what action to take if you get things wrong.

Mistakes happen. This we know. And if you’re running your own business, you may well have made a few along the way! As common as they are, some are avoidable and some less so. To help avoid any mistakes on filing your annual tax return, there are a few easy steps you can take. And if you make a mistake, don’t panic. You can resubmit your return within 12 months, but you’ll find it easier on your stress levels to try and get it right first time! Here are our top tips:

Tip tips for completing your tax return online

  1. Plan ahead. You’ll need to file online (after the October paper deadline) and you’ll need a security activation code and password. This can take a week or so to arrive, so don’t leave it too late.
  2. Read everything. Read it all through before you start and think about what documents and numbers you’ll need to file your return.
  3. Be ready for the big three: remembering tax on savings, checking pension contributions and declaring all income (including property and capital gains)
  4. Use the online guides that the Government has online – there are even official YouTube videos online that explain all manner of issues.
  5. Give more information not less. If in doubt, add extra pages and make sure you’ve explained any significant changes to your income.
  6. If you’ve completed a return before, use last year’s as a reminder. If this is your first time, get help from someone who has done it before.
  7. Get professional help. If you aren’t confident with numbers, you’re just not sure what to do, or can’t access any informal advice, ask for help. Friends are always happy to recommend good people and point you in the right direction.

Mistakes – what mistakes can happen?

There’s myriad mistakes that could be made on a tax return – after all, tax is rarely considered easy. The most common mistakes are:

  1. You’ve missed the deadline
    It’s not a disaster, but this one is really best avoided. You’ll be fined £100 automatically – even if you aren’t due to pay any tax. Ouch. More than one day late and you’ll start racking up fines at the rate of £10 a day on top of that initial £100. And from six months onwards they only get worse by including a percentage of your overall tax bill. And over a year late and, well, that really is a disaster. Trust us: it’s not worth it.
  1. You’ve paid too much tax
    Not ideal, but overpayment of tax happens and it should be fairly straightforward to resolve. Perhaps you’ve not claimed for an allowance, or made a complex miscalculation? You will need to resubmit your return with the correct figures – either online or on paper, depending upon the way that you filed. Your tax return will then then be recalculated. You may be due a rebate, but it might be the case that you may also have to pay a fine.
  1. You’ve paid too little tax
    This one is more problematic. While the process is the same as above to resubmit your tax return, the fines may not be. Again, depending on the reasons for your miscalculation, HMRC may deem you careless, which is far from ideal. Any resulting fines can be up to 70% of the tax due, which can make the eyes water.
  1. You’ve missed out some information
    Missing our important information – or supplementary financial information – can happen. But be warned if it is something significant you may fall into that ‘careless category’ and that doesn’t go down that well. While fines can be discretionary, carelessness really can cost you. HMRC claims that it does treat genuine mistakes as fairly as possible, so don’t pretend the dog ate your homework, or your child used it as a paper airplane. They’ll have heard it all before, more than once!

For help with any aspect of your tax return, or accounting issues please get in touch with us at FD Business for an initial free no-obligation consultation.

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