Tax is one of those things most of us like to pretend doesn’t exist and maybe this is why most accountants have a pretty hideous January, trying to make sure all their client’s tax returns are done on time.
I always feels slightly smug after Christmas because, not doing tax returns myself, I can act as observer to the manic hours many accountants have to put in. As an observer I am always amazed how the tax return deadline seems to catch people unawares.
Tax payers would be much better off if they got their returns done as soon as possible after 5th April rather than leaving it to the following January.
Firstly, they would have an idea of the tax they owe far earlier, which would allow them to make sure they have the funds available to pay the bill. If they wait until January to give their papers to their accountant, they have no time to save if their tax bill is much higher than they anticipated.
Secondly, the more time there is between the end of the tax year and the time tax returns are due, the more time there is to lose paperwork and forget important information accountants may need to do their job properly. Handing accounts/tax information to their accountant nice and early would get this job off their to do list and they don’t have to worry about it.
Thirdly, there are options to spread the tax owed through their tax code if their return is done before the end of December. This means that instead of making a large payment at the end of January any outstanding tax can be spread over the following tax year.
Fourthly, if less money was earned last tax year than in the previous year, the taxpayer may have the opportunity to reduce their July payment on account. This has obvious benefits to cash flow.
Finally, and I know this won’t be the top of many people’s agendas, accountants will be really grateful. This means some accountants charge clients who get information to them nice and early less than those who wait until the last minute. So clients could save some money by being more efficient.
A great resolution for 2013 would be to get your tax return information to your accountant by the end of May at the latest. You will be much better prepared for the bill you have to pay and may even be better off.