Are you self-employed, sole trader or a subcontractor?

If you earned more than £1,000 from self-employment between 6 April 2018 and 5 April 2019 you must register with HMRC as a Sole Trader and pay tax on your profits.

This is where professional bookkeeping and accountancy services are indispensable. We can ensure that you are neither unintentionally falling foul of HMRC regulations or paying too much tax by omitting allowable expenses.

Calculating and submitting your tax return equals an investment in time and effort. Make sure it is right first time to avoid unnecessary difficulties with HMRC and possibly investigation, which could swallow up weeks of business time, cost you money and cause a lot of stress.

Common mistakes in tax returns

HMRC tax inspectors can demand to see your tax records going back up to 5 years, so it is important to make sure your accounts are in good order and to hold on to them.

Late Return

If you choose to file your tax return as a hard copy, you must submit it by 31 October each year. If you submit online, as most do, you have until 31 January.

Improper Expenses

The HMRC rules about allowable and non-allowable expenses may not appear clear, but tax inspectors are very strict about their implementation. Corporate hospitality, charitable donations and travel expenses are common areas of misunderstanding.

VAT Claims

You are not obliged to register for VAT until your turnover exceeds £83,000 per year, but you may choose to register voluntarily. Get your VAT wrong and you could face a maximum penalty of 7 years’ imprisonment plus an unlimited fine.

Incomplete Information

Remember, you must report all relevant income, including income not directly related to your business so that HMRC has a clear picture of how much you earned in the year.

Factual Errors

Simple mistakes like ticking the wrong box, entering the wrong numbers, getting your National Insurance Number or Unique Taxpayer Reference Number wrong can all come back to haunt you.

A summary of your obligations to HMRC as a Sole Trader/Sub Contractor

  • Keep records of your business’s sales and expenses

  • Send a Self-Assessment tax return to HMRC every year

  • Pay Income Tax on your profits and Class 2 and Class 4 National Insurance

You’ll need to apply for a National Insurance number if you’re moving to the UK to set up a business.

On the Right Track

At Sylwia Klocek Accounting we keep our clients on the right track, avoiding trouble with HMRC and maximising income. We take care of the paperwork to leave you to get on with business.