Sweating under today’s tax return deadline? It might be time to let your accountant go…
Left your tax return until the last minute? Desperate to avoid a fine? Take a few tips from me, an award-winning financial technology journalist.
Well, okay, the “award” came from Guildford Magistrates Court – in the form of compensation against my useless accountant at the end of a small claims hearing.
That verdict was an Oscar-worthy surprise ending, though, because the magistrate said early on that mine was the “worst presented case” that he had ever seen.
Be that as it may. The award against the defendant was for the fines and interest that HMRC had levied on me for filing my tax returns late, two years running, despite having an accountant to supposedly file them for me.
In truth, it was a Pyrrhic victory. When divided against the time I’d invested in amateur forensics, the return was worth about a pound an hour.
Still, I kicked a lazy accountant in the assets, and that is always worth doing. And I like to think that I won a victory for all self-employed people by proving two important universal points: tax legislation is nothing to fear, and the taxman is your friend.
If I can win a court case against an accountant, anyone can. And by extension, most people don’t need an accountant to file their tax return, especially if they’re sole traders, as long as they remember a few simple but important principles.
First, ask yourself whether your accountant is actually doing what you’re paying them to do. They should be alleviating the stress of tax season, not making it worse. Maybe I’ve been unlucky, but the two accountants I’ve used made form-filling sound like one of the 12 labours of Hercules.
So if you think they’re doing a shoddy job, sack them.
I currently freelance for a publisher that once made me redundant. According to my accountant, this could be massively problematic because the tax office takes a very dim view of this. Er, no it doesn’t, it turns out. When I eventually asked someone at the tax office, she couldn’t have been less bothered.
That brings me to the second point: the tax collector is your friend. Visit or call the HMRC team any time outside of January and they really live up to the civil servant billing. They actually enjoy being helpful.
There is a massive difference between the advice you get from an accountant and a civil servant. Most accountants tend to give you data on a subject, but the taxman gives you context which comes from their experiences. While an accountant knows that a tomato is a fruit, the civil servant has the wisdom not to put it in a fruit salad.
So if you’re sweating on today’s deadline, and you don’t have a competent and qualified accountant to guide you, what should you be doing?
Make sure you read any guidance from HMRC – the online advice really tries to helpfully answer questions. Answer everything you possibly can with complete honesty. And if you have any issues, just make it clear that you will provide qualifying information later.
If you over-pay, the tax office will settle up later. And if you under-pay, it will ask for the balance in six months.
The taxman doesn’t want to overcharge you. But some accountants do.