In my experience, the most common tax return errors made by taxpayers are in ten areas:
- selling a property or other asset
- one-off interest on deposits (eg when long term investments mature)
- new bank accounts or investments
- payments/benefits/expenses from other company directorships
- temporary employments
- accrued income scheme interest on government gilts
- joint ownership of rental properties or other assets
- assuming low bank interest is the same as nil
- not realising child benefit can have a tax impact
- pension contribution misunderstandings
Good ways to spot or prevent these are:
- using the checklist of 10 items above, as a prompt
- getting the tax return done early (eg August to November, not December and January)
- checking your personal bank statements for unusual credits
- giving your adviser a full list of your assets, including non-income producing ones
- regular updates to your adviser of activity and transactions during the year
- not relying on just checking comparatives with last year – instead ask “what might have changed?”
- reconciling the tax due: why is it that figure? (eg PAYE overpayment due to benefit in kind change = £A; higher rate on dividends = £B; gift aid tax relief = £C; £A+B+C = tax due)
These help prevent unexpected tax, interest and penalties.
If you have submitted your tax return with an error, speak to us about how to correct this before HMRC spot it and to help minimise potential penalties.