If you use paper records, here is a breakdown of what records your accountant will need to produce your accounts and your self-assessment tax return.
Most importantly, remember that the 2019-2020 tax return covers the tax year 6th April 2019 to 5th April 2020. If your accounts have a 31st March year-end, that will be a simple 1st April 2019 to 31st March 2020 period or if you have a different year end, it will be 12 months to your accounting year end date that falls in the above tax year. For example, if your year-end is 31st December, it will be records for 1st January 2019 to 31st December 2019 that is needed.
Records for your Tax Return
Employment Income – If you have any employment income, you need to provide your P60, or P45 if that employment income ceased during the year.
Dividends received during the year.
Rental income – Your accountant will need to see your property management expenses if you receive your rental net via an estate agent. Also, your mortgage interest allows for some additional relief but unfortunately not all of it is claimable.
P11d – This would be for any benefits you received.
Private pension payments – Give details of any payments made as these can give you additional relief if you qualify.
Bank interest received – Anything received during the year (excluding ISAs). This is one item on your tax return HMRC already knows about, so be sure not to forget this, if not HMRC will come a-knocking!
Any other income you received during the year. This may come from another self-employment job that you may have or a chargeable gain from selling a rental property or some shares etc.
Your tax return must show all your income so it’s best to be safe rather than sorry and check something you are not sure about with your accountant instead of deciding not to declare it.
Getting your financial affairs in order well ahead of the deadline also means that you are far less likely to be hit with costly penalties either because the tax return was filed late or there was an error due to it being rushed.
Records for your accounts
Bank statements – For all your business accounts and for the entire period. You’ll probably have one main account, but if you have a deposit account or a reserve account, make sure to include these. Don’t forget to include any cheque books and paying-in books if you still use these. ‘Chq 00067 for £54.93’ means nothing.
Loan statements – Your accountant will need to know the closing balance as at your year-end date. The interest incurred is a tax-deductible expense.
Finance agreements – Copies of any new agreements taken out in the year. The interest on the repayments is a tax-deductible expense and what you have purchased could fall under the annual investment allowance.
Business credit card – They’ll need these statements too. If it’s a personal card that you occasionally use to pay business expenses, spend the time highlighting these. This will save your accountant having to go through these later on.
All sales income. That means all your sales invoices for the year (regardless of whether they have been paid or not).
All purchase invoices and expenses receipts for the period. If your accountant doesn’t have these, they may need to make assumptions and/or some expenses could be missed out altogether, thereby increasing your tax bill.
Petty cash receipts – Your accountant will need the petty cash balance at the year end. They will need to reconcile your cash, so this is vital.
Payroll records – Unless your accountant runs your payroll. You will need a print-out of each month’s pay run so they can check to see if there were any outstanding amounts. Make sure your reports show employers national insurance.
Stock value – its value as at your year-end.
Arguably, keeping your records in a paper format isn’t the best system to have, so it is possible that you will hear from your accountant not long after you have supplied your records. They’ll probably be chasing missing paperwork, maybe even asking for paperwork that relates to the correct tax year.
It’s worth mentioning that you can avoid this hassle by switching to online bookkeeping software. This will keep all your records in one place and automatically organise them for you so there would be no need to worry about missing anything off as you can simply give your accountant access to your online records throughout the year. Here at TaxAssist Accountants we offer clients access to QuickBooks, Xero and Receipt Bank, as well as provide you training to ensure you are happy with how it all works.
How TaxAssist Accountants can help
We can help you complete your tax return accurately so that you can meet the deadline and have already assisted many self-employed individuals and business owners to file theirs. Call us today on 0800 0523 555 or complete our online form to get in touch.
Last updated: 14th December 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.