ACCOTAX - Accountants & Tax Consultants
Welcome to ACCOTAX, a firm of Chartered Accountants in London. The firm was established in 2009 and has helped thousands of businesses and individuals...See More
ACCOTAX - Accountants & Tax Consultants
Welcome to ACCOTAX, a firm of Chartered Accountants in London. The firm was established in 2009 and has helped thousands of businesses and individuals...See More
Frequently asked questions
What records must a sole trader keep for HMRC?
As a sole trader, you must keep records of all income and expenses related to your business. This includes sales receipts, invoices, bank statements, and records of any personal money introduced into the business. You should also retain records of any equipment or assets purchased. Keeping accurate records throughout the year makes completing your Self Assessment tax return far simpler and helps you claim every allowable expense. HMRC can ask to see your records, so it is wise to keep them for at least five years after the 31 January filing deadline.
How can an ACCA or ICAEW accountant help with my tax return?
An accountant who is a member of ACCA or ICAEW has undergone rigorous training and must adhere to strict professional standards. They can prepare and submit your Self Assessment tax return accurately, ensuring you pay no more tax than necessary. They will identify allowable expenses you might have missed, advise on capital allowances, and help you plan for your tax bill. They can also act as your agent with HMRC, dealing with any queries or investigations on your behalf, which reduces your stress and saves you valuable time.
Do I need to register for VAT as a sole trader?
You must register for VAT if your taxable turnover exceeds the current VAT threshold, which is £90,000. Even if your turnover is below this, you may choose to register voluntarily, particularly if you sell to other VAT-registered businesses. An accountant can help you decide whether voluntary registration is beneficial, considering factors such as the nature of your trade and your customer base. They can also manage your VAT returns and ensure you comply with all HMRC requirements, avoiding penalties for late submissions.
What is the difference between a sole trader and a limited company?
A sole trader is an individual who runs their business as a self-employed person, keeping all profits after tax. You are personally responsible for business debts, which can put your personal assets at risk. A limited company is a separate legal entity, offering limited liability protection. Profits are subject to Corporation Tax, and you may pay yourself a salary and dividends. Each structure has different administrative and tax implications. An accountant can explain the pros and cons of each, helping you choose the most suitable arrangement for your circumstances.
How often do I need to submit a Self Assessment tax return?
You must submit a Self Assessment tax return every year if you are a sole trader, even if you have no tax to pay. The tax year runs from 6 April to 5 April, and the deadline for online filing is 31 January the following year. You must also pay any tax owed by the same date. If you are new to self-employment, you need to register with HMRC by 5 October in your second tax year. An accountant can ensure your return is filed on time and accurately, helping you avoid late filing penalties.
Can an accountant help me if HMRC investigates my tax return?
Yes, an accountant can provide invaluable support if HMRC opens an enquiry into your tax return. They will review your records, prepare a detailed response, and communicate with HMRC on your behalf. They can also advise you on your rights and obligations, and help you negotiate any settlement if errors are found. Having professional representation can reduce the stress and potential cost of an investigation. It is important to act quickly and seek advice as soon as you receive any correspondence from HMRC about an enquiry.
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