I occasionally meet people who may think that completing their own tax return saves them money, unfortunately when they add up all the hidden costs that they don’t realise it can actually prove to be very expensive:
1) Your time – one that is most often overlooked. Completing your own tax return isn’t free, it is costing you work time that could be better spent earning money rather than trying to work out how to complete the tax return (and accounts.) When you consider that it may take between half a day and a day to complete in total, that is a days earnings lost.
2) No tax relief on your time – your own time does not qualify for tax relief, so however long it takes you this can’t be claimed for. Contrast this with accountancy fees that, for the self-employed, qualify for tax relief that may actually take nearly a third or more off the cost. On our fee table, I show the net cost for a typical basic rate taxpayer and the savings that can be achieved.
3) Missed deadlines – I have seen people who came to me for help where the penalties they have been charged for missing deadlines were more than our fees would have been. With an adviser you don’t need to worry, as we remind you of upcoming deadlines so you can relax. When you consider that the fines for a late return can now amount to over £1600, even when there is no tax due, these can be significant.
4) Errors – In addition to my near quarter of a century of experience in tax and finance we use the same software as the top accountants in the country use to assist us. I have seen people who ended up with tax bills of over £60,000 because they didn’t understand the tax laws and claimed for expenses that were not allowable over a number of years.
5) Penalties – in cases where tax has not been correctly calculated and paid, this could leave people open to additional fines from HMRC – these can in some cases double the tax bill.
6) Changes – tax laws are constantly changing, indeed professionals such as myself are required by our professional bodies to complete many hours of continuing education each year to stay up to date with the changes. Not doing this could leave taxpayers open to fines and penalties as above.
7) Worry – with a professional adviser, you know that your affairs are dealt with for you, and you can relax.
When you add up these benefits, you may have a different view on ‘saving money’ by completing your own tax return.
One of the things that people worry about before they see an adviser is what it is going to cost – this is the reasoning behind our fixed fee packages, and no cost initial meeting. You know in advance what the costs will be, so can plan for these.