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Questions and answers

1. What is a tax return?

A tax return is a form on which you:

- report details of your income


- claim expenses, allowances and reliefs


On the basis of information on tax return HM Revenue and Customs (or you/your accountant) calculate amount of tax payable by you

2. Who needs to prepare his tax return?

You may be required to submitt tax return if your financial affairs are more complex than simple employment income. You are obliged to do so if you belong to the following categories of people:


- self-employed or in partnership

- company director

- income from property, savings or investments of £10,000 if taxed or £2,500 if untaxed

- income above £100,000

- income form overseas

- if you are employed and want to claim expenses of £2,500 or more

- you have obtained capital gains


There are other less common categories of taxpayers obliged to submit tax return. If you have any doubts just contact us.

3. What are my deadlines?

31 October: all paper returns

If you send in a paper tax return, it must reach HMRC by midnight on 31 October.

31 January: online returns

If you send your tax return online, it must reach HMRC by midnight on 31 January.

The deadline is earlier if you owe tax of less than £2,000 and you want HMRC to collect it by reducing your Pay As You Earn (PAYE) tax code next year. In this case you need to send your tax return online by 30 December instead.

4. What expenses can I claim?

 

The amount of expenses you can claim depends on a number of circumstances such as: what you do, how do you work, what do you buy etc. The tax law is extremaly complex and is based on various sources – statutory law, tax cases, extra-statutory concessions etc. Please contact us for more information.

5. How much tax do I have to pay?

The amount of tax paid depends on your taxable income. Your taxable income is your income less tax allowable expenses. Income tax is payable on taxable income above tax free amount (in the year 2010/11 - £6475).

 

First £37,400 above tax free amount is taxable on 20% (basic rate). Income above this amount but below £150,000 is taxable on 50% (additional rate). Additionally for income above £100,000 tax free amount is reduced by £1 for every £2 of income above the limit.

There there are also a separate dividend rates of 32,5% and 42,5% for income taxable above basic rate. For more information please contact us.

 

There are also National Insurance Contributions payable on employment and self-employment income.

6. What if HMRC checks my tax return?

HMRC normally has 12 months from the date you sent in your tax return to tell you that they intend to start a check. If your tax return is correctly prepared and information contained in it is correct there is no need to worry.

7. What happens if my tax return contains errors?

If in effect of an error you underpaid income tax HMRC will ask you to pay the difference. There can be penalties imposed if HMRC beliefs that the error was deliberately or when you do not cooperate sufficiently during enquiry.


 

8. Do you guarantee that you will prepare my tax return correctly?

We are qualified and have many years of experience. We can guarantee that tax returns prepared by us are prepared correctly. In case of error or omission because of our fault we will compensate any reasonable expenses and losses incurred by you. Obviously we can not guarantee correctness of information provided by you and included in your return or used as basis for for estimated.

9. What happens if I do not send a tax return?

 

If you will not submit your tax return before deadline (normally 31 January) you'll be charged an automatic £100 penalty. If a Partnership Tax Return is late there's a £100 penalty for each partner. There may be further penalties if you continue not sending your return in.

 

There will be serious changes in penalties regime from October 2011.

 

10. Why should I use an accountant/tax adviser?

Obviously there is no obligation to use an accountant/tax adviser to prepare tax return. You can do it yourself or ask an HMRC officer for help. However bear in mind the fact that the tax law is extremely complex and is based on various sources – statutory law, tax cases, extra-statutory concessions. To prepare tax return correctly and to pay not more tax than you should you would have to have huge knowledge of tax regulations. Also HMRC enquiry centre's officers obviously are not bothered if you pay to much tax and interested in your tax savings.

 

 

In our work we frequently correct returns prepared by not qualified persons which cause huge financial losses to people who tried to “save” on accountant's fees. Usually it is not very reasonable to save £100 on accountant's fee and lose £1000 on unnecessary tax or penalties.

 

 

Please note that above applies to qualified advisers/accountants only, not everybody who claims that he is an accountant or a tax adviser.

11. Why should I chose you?

We are qualified, fast, efficient and reliable. We have many years of experience in the industry and we are up to date with developments in tax regulations and precedences. Our fees are very competitive (it means REALLY the most competitive - please compare with our competitors). And as far as security is concerned we take full responsibility for our work - our Professional Indemnity Insurance covers claims up to £300,000.

 

We are bonded by membership of our management in the Institute of Financial Accountants and Federation of Tax Advisers.

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