The most common accounting mistakes and tax errors made

Submitting correct tax returns is crucial in avoiding fines and penalties, and having accurate accounts is essential for giving you the right picture of your finances. However, we appreciate that it’s a technical area and it’s not always easy to get it right first time.  

If you’re struggling to manage it all, let us help. Accountants offer you a proactive and experienced service to ensure your tax returns and accounts are correct and on time. 

This guide highlights common mistakes in tax returns, accounts and bookkeeping to give you some pointers on where you could improve and avoid repercussions for you and your business. 

Tax return errors 

Common tax filing mistakes include: 

• Omission of income and expenses 
• No inclusion of bank interest income 
• Not claiming higher rate tax relief for pension contributions and charitable donations 

The main consequence of making errors on your tax return is financial. Penalties may be charged if there are errors that understate or give a false account of your tax liability. 

If you’re concerned about making mistakes on your tax return, get a quote from an accountant. Accountants are tax experts and are very experienced in preparing both simple and complex tax returns. 

If you have made mistakes on your tax return, you will need to consider amending your tax return. An accountant can look at multiple tax return periods for you and make the changes. The window for amending a tax return is within 12 months of the tax return deadline. Penalties may be charged if you make mistakes on your tax return. 

We highlight more tips on tax returns errors to avoid in our guide 

 

Accounting mistakes 

As well as compliance issues, mistakes in your accounts can lead you to have an inaccurate picture of where your business stands financially. This could lead to cash flow problems and business failure. 

Common accounting mistakes can include: 

• Missing bank reconciliations 
• Including personal transactions in your accounts 
• Including capital expenditure in your profit and loss account 

You can prevent accounting errors by asking for more help from your accountant and understanding accounting principles and rules. While cloud accounting packages offer lots of advantages, the information will only be as good as the standard of data entered. 

If you get your accounts wrong, it will depend on what’s happened and how significant the error is. Speak to your accountant about the mistake and they will determine the best way of resolving the accounting errors. 

Find out more about accounting mistakes to avoid in our comprehensive article. 

Bookkeeping mistakes 

Business bookkeeping involves keeping up to date records of transactions so you can monitor how your business is performing. Bookkeeping can also relate to individuals keeping records for their tax return. 

Good bookkeeping means you have all the information together, ready for when the time comes to prepare you accounts or tax return. Mismanagement of receipts and invoices can lead to issues including omission and data entry mistakes. 

Other bookkeeping errors can include the use of the wrong VAT code leading to your VAT liability being calculated incorrectly. 

Using bookkeeping software can help you keep your records up to date and minimise mistakes. 

Find out more in our bookkeeping mistakes guide. 

If you make mistakes in your bookkeeping, these may result in you making the wrong decisions for your business or for your own financial circumstances. Bookkeeping mistakes should be rectified as soon as possible, but if the errors relate to financial years already reported on your accounts or tax return you should speak to your accountant. 

If there are errors on your VAT return you must let HMRC know. When the VAT error has a net value of £10,000 or less or between £10,000 and £50,000 but less than 1% of the total value of your sales you can make an adjustment on your next VAT return. 

If the net value of errors is over £50,000, between £10,000 and £50,000 and more than 1% of the total value of your sales, or the errors are deliberate you must report these to HMRC separately. 

How TaxAssist Accountants can help 

We are experts in tax, accounting and bookkeeping and would love to support your business. Call TaxAssist Accountants on 01438 340111 or use our online contact form. 

 

Last updated 27 Jan 2025 | First published 27 Jan 2025

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This 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.

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