A taxing situation

A friend of mine unfortunately got a tax bill of £6,000 recently. Ouch.


He wasn’t expecting it.  HMRC sent him this little surprise in addition to his usual income tax from his steady job, so he thought he was all square with them.


However, it turned out it was because of a second property he owns.


Even though he’d declared the income he gets from it, such as the rent from his lodger, he hadn’t declared any expenses.


HMRC wrongly thought he was simply coining it in and needed cutting down to size, so to speak.


Even though HMRC should issue a refund once the right self-assessment figures are in, I think that for a new business that would be crippling.


You could easily end up using any spare cash in your business to pay off your (incorrect) tax bill, leaving nothing left for the day-to-day running of your company until the refund comes through.


Which could take a while, if you’re especially unlucky.


Getting a self-assessment tax return wrong is easily done, but annoying to fix. Even if you get your money back nice and quickly, there’s still the hassle of re-calculating your taxes and calling up HMRC to chase it up.


Hassle you can do without when you’re trying to run a business.


The easiest thing to do is get it right first time – either yourself, or by getting an accountant to do it for you.


We have both solutions covered right here: