Stay Ahead of HMRC Compliance Checks for CIS Contractors

Stay Ahead of HMRC Compliance Checks for CIS Contractors

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Stay Ahead of HMRC Compliance Checks for CIS Contractors

By Ali at Taxfile.

As the new tax year approaches, CIS contractors must prepare for the upcoming 2024/25 tax return season.  Last year we witnessed a significant increase in HMRC compliance checks delaying refunds, with many contractors being asked to provide detailed CIS pay/deduction slips and bank account transactions to verify their income.

At Taxfile, we are here to help you navigate these challenges and ensure your tax affairs are in order while offering you peace of mind with our unique HMRC investigation cover.

Why Are HMRC Compliance Checks on the Rise?

HMRC has ramped up its efforts to ensure compliance among CIS contractors, particularly focusing on verifying income and deductions. Last year, many contractors were caught off-guard when asked to provide:

  • CIS pay/deduction slips to confirm tax deductions at source.
  • Bank account transactions to prove income received from contractors.

Failure to provide these documents can lead to penalties, delays, and even full-scale investigations. With HMRC’s increased scrutiny, it’s more important than ever to ensure your records are accurate, complete, and readily available.

At Taxfile, we specialise in supporting CIS contractors with their tax returns and compliance needs.

How we stand out:

1. Expert Preparation of CIS Tax Returns

Our team ensures your 24/25 tax return is accurate, compliant, and submitted on time. We review your CIS pay/deduction slips, income, and expenses to minimise the risk of errors that could trigger an HMRC compliance check.

2. HMRC Investigation Cover is Included

Unlike other accountancy services, our invoices include HMRC investigation cover as standard. If HMRC decides to investigate your tax return, we’ll handle all the additional work required to represent you—at no extra cost. This means you’re protected from unexpected fees and stress.

3. Proactive Record-Keeping Support

We guide you on how to maintain proper records, including CIS slips, bank statements, and expense receipts, so you’re always prepared for an HMRC request.

4. Dedicated CIS Specialists

Our team understands the unique challenges faced by CIS contractors. We’re here to answer your questions, provide tailored advice, and ensure you’re fully compliant with HMRC regulations.

With HMRC’s increased focus on compliance, now is the time to act to ensure you get your refund sooner. We urge you to come prepared with your CIS deduction slips and your bank feed covering the period from 06/04/2024 – 05/04/2025.

Making Tax Digital for Income Tax & Self-Assessment (MTD f ITSA): Your Friendly Guide

Making Tax Digital for Income Tax: Your Friendly Guide

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Making Tax Digital for Income Tax & Self-Assessment (MTD f ITSA): Your Friendly Guide

Tax. The very word can sometimes send shivers down your spine! But what if we told you there’s a way to make things a little less… taxing? Enter Making Tax Digital for Income Tax & Self-Assessment (MTD f ITSA)!

Now, before you click away, hear us out. This isn’t about making tax more complicated. It’s actually about bringing your tax admin into the digital age, which in the long run, can save you time and reduce errors. What’s more, if you work through Taxfile, it could also save you money! Think of it as upgrading from paper maps to Google Maps for your finances!

If you work through Taxfile, it could save you money!

So, what exactly is MTD for Income Tax?

Making Tax Digital for Income Tax & Self-Assessment is a government initiative that affects self-employed individuals and landlords/ladies with a total business and property income above a certain threshold. It requires them to keep digital records of income and expenses and send quarterly updates to HMRC using MTD-compatible software*.

Who needs to get on board?

  • For the 2026/27 tax year, the rules apply to those with a total gross income (turnover) from self-employment and/or property exceeding £50,000 per year.
  • For the 2027/28 tax year, it will apply to those with a turnover greater than £30,000 and …
  • For 2028/29 it will affect those with a turnover of £20,000 or more.

If any of these apply to you, then MTD for Income Tax is something you’ll need to familiarise yourself with — but Taxfile can help!

Instead of one big tax return at the end of the year, MTD requires you to send updates every quarter. Think of it as breaking down the task into smaller, more manageable chunks. These updates will provide HMRC with a summary of your income and expenses for that three-month period.

Why the switch to digital?

HMRC believes that going digital will:

  • Reduce errors — let’s face it, manual data entry can be prone to mistakes. Digital records can help minimise these.
  • Make tax management easier — regularly updating your records can give you a clearer picture of your business’s financial health throughout the year, not just at the tax deadline.
  • Potentially reduce stress — knowing you’re keeping on top of things digitally can be a weight off your mind!

*Do You Need to Buy MTD-Compatible Software?

The key to MTD for Income Tax is using compatible software. The software allows users to keep digital records of income and expenses, submit quarterly updates to HMRC, and view tax information in one place. There are various software packages available. While some are free for those with simple needs, others offer more advanced features.  HMRC estimates the additional cost to the taxpayer at £338 as a one-off administrative burden and then an additional £100 each year following. However, Taxfile has a way for you to potentially avoid such additional software costs, explained below.

“Taxfile has a way for you to avoid such software costs”

Taxfile’s Solution — What to Do

At Taxfile, with our in-house software skills for various MTD packages, we believe that the taxpayer needs only to provide us with their business transactions (income & expenditure) in a simple spreadsheet each quarter — we’ll then take on the additional responsibility.  Working through Taxfile, MTD can be that simple!

“Simply supply us your quarterly income & expenditure transactions in a spreadsheet — we’ll do the rest!”

If you would like to speak to us about MTD, have any concerns, or would like some advice, we offer free consultations. We are happy to help whenever we can, so just drop into our office, book an appointment, or give us a call on 020 8761 8000.

020 8761 8000 Book Appointment Contact Us

Taxfile are accountants and tax advisors based in Tulse Hill, London SE21.

Late with your tax return and tax payment? What happens now?

Missed the Tax Return Deadline? What Happens Now?

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Missed the Tax Return Deadline? What Happens Now?

[Updated February 2025]: If you missed the 31 January deadline to submit your self-assessment tax return, you are now into the penalty stage. HMRC applies an automatic £100 penalty to those who are anywhere from 1 day to 3 months late. Further penalties are then added if you take even longer to comply. It’s even worse if you haven’t paid the tax owed to HMRC by 31 January because you’ll then owe interest on that too.

Our Advice if You’re Late

If you are late submitting your tax return and/or paying the tax owed, our advice is to:

  1. submit your tax return without delay;
  2. pay as much tax as you can as soon as possible*.
    By doing both, you’ll minimise the penalty and interest payable to HMRC.

* Payment of any historic tax for 2023/24 and prior years is best dealt with by the last day of February at the latest. Any amount that remains due for 2023/24 is considered late thereafter and will attract an automatic HMRC charge of 5%.

What if you Cannot Pay?

If you cannot pay (or have tax arrears) it’s important that you demonstrate to HMRC that you’re paying as much as you can — and as regularly as possible. The good news is that HMRC has a quick and easy facility for exactly this purpose. By calling 0300 200 3402, you can pay using a debit card. It takes only minutes and doesn’t require any explanation — give it a try!

You will need your tax reference and, after making a payment, will be given a payment reference.

Possible Excuses for Late Tax Returns

What are your options if there were genuine reasons, beyond your control, that stopped you being able to submit your tax return on time? Well, if you “took reasonable care to meet” a deadline and there was a genuine reason why you were late, you have the option to appeal. However, your circumstances must fit HMRC’s eligibility criteria. Let’s take a look at those below.

Circumstances that are taken into account by HMRC when considering appeals include:

  • if a close relative or partner died shortly before the tax return or payment deadline;
  • if you had to stay in hospital unexpectedly;
  • if you had a life-threatening or serious illness;
  • if your computer or software failed at the time you were preparing your online return;
  • if HMRC’s online services were disrupted;
  • if you were prevented from filing your return or paying your tax because of a fire, flood or theft;
  • if there were unexpected postal delays;
  • if you have a disability of mental illness that affected the delay;
  • if you misunderstood your legal obligation, or were unaware of it;
  • if someone you’d appointed for the task (e.g. accountant or tax adviser) failed in their obligation on your behalf;
  • and occasionally other reasons which, if genuine, HMRC may deem to be relevant (for example, some Covid-related circumstances).

Excuses that aren’t usually accepted by HMRC include:

  • you didn’t receive a reminder from HMRC;
  • you found HMRC’s online system too difficult to use;
  • your cheque bounced or payment failed due to you having insufficient funds;
  • you made an error on your return.

Appealing Against an HMRC Penalty

You have the right to appeal against HMRC’s decision to issue you a penalty so long as it’s appealed soon enough after the penalty notice. That includes penalties for late tax returns or payments. Taxfile can help advise you about all of that (see below).

Taxfile are Here to Help

If your tax return is late, you owe HMRC tax, or are owed a refund by them, come and see us as soon as possible. Taxfile are accountants and tax advisors in Tulse Hill, South London. We’ll help to sort it all out for you with the minimum of fuss, at a competitive price. Come in as early in the month as you can and we’ll help you to sort things out — for the best possible outcome. We know the rules and liaise with HMRC every single day on behalf of our clients. So, if we can help convince HMRC to reduce or completely remove any penalty you may be facing, we will do so, so long as your circumstances fit the relevant HMRC criteria. You can only appeal within 30 days of the date of any penalty notice you receive, so the earlier you contact us the better – give us a call on 020 8761 8000 or fill in this short form and we’ll take it from there. Alternatively, book an appointment with one of our expert tax advisors to chat things over, without obligation. Payment plans called ‘Time to Pay’ arrangements may also be available for eligible people who cannot to afford to pay their tax in one lump sum — Taxfile would be happy to tell you more.

020 8761 8000 Book Appointment Get Started Here
Final day to submit your Self-Assessment tax return

31 January Was the Tax Return Deadline!

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TODAY is the Self-Assessment tax return deadline!

[As at 31 January 2025]: The 31st January is THE FINAL DEADLINE by which you need to file your Self Assessment tax return with HMRC. If you miss that deadline (11.59pm on 31st), you risk a £100 HMRC fine right away plus other significant penalties thereafter. Interest will also be charged from 1 February if tax is not paid by midnight on 31 January (rules apply).

Time is running out, so contact Taxfile for help with your tax return as soon as possible please. Book an appointment* with one of our helpful tax advisors and accountancy experts TODAY and we’ll make filling in and submitting your tax return simple!

020 8761 8000 Book Appointment Get Started Here

We’ll make filling in and submitting your tax return easy!

Come in as soon as you can for professional help with filing of your tax return. We’ll require your records and figures for the financial year 6 April 2023 to 5 April 2024 unless you have a different accounting period. Plus any previous years not yet submitted, if applicable.

* As well as a face-to-face meeting, we can do a ‘virtual’ meeting with you, for example using Zoom video, Microsoft Teams, FaceTime, WhatsApp, Google Hangouts — or whatever suits you best.

It doesn’t matter if you have zero tax to pay – you still need to submit your tax return.

020 8761 8000 Book Appointment Get Started Here

* Please note: in busy times like January, a deposit may be required before appointments commence.

VAT Schemes in the UK: A Guide for Businesses

VAT Schemes in the UK: A Guide for Businesses

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VAT Schemes in the UK: A Guide for Businesses

For businesses operating in the UK, understanding Value Added Tax (VAT) schemes is crucial. Not only does VAT impact your cash flow, but navigating the different options can feel overwhelming. This blog post simplifies VAT schemes in the UK, helping you choose the most suitable one for your business. Read more

A Brit's Guide to Value Added Tax (VAT) Returns

A Brit’s Guide to Value Added Tax Returns

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A Brit's Guide to Value Added Tax (VAT) Returns

VAT — the three little letters that strike fear into the hearts of many a Brit. But fear not, fellow taxpayer! Today, we’re taking a break from the spreadsheets and diving into the delightfully quirky world of UK VAT returns.

VAT, the Shapeshifter

Ever feel like VAT is playing a game of tax-code whack-a-mole? One minute, it’s 20% on your fancy new bicycle helmet. The next, it’s vanished like a magician’s rabbit on a packet of crisps (because, let’s face it, crisps are a VAT mystery all on their own).

The Great Cake Debate

Who knew a simple sponge cake could cause such a stir? Apparently, a sprinkle of chocolate transforms it into a full-VAT situation. Don’t worry, Victoria sponges are safe (for now).

VATman vs. the Smoothie Smugglers

Remember the smoothie wars of ’07? Innocent Drinks tried to claim their creations were “liquefied fruit salad” to avoid VAT. HMRC, ever the defender of fiscal justice, said, “Not so fast, those are clearly beverages!”  A tale that proves even the fruitiest tax battles can be entertaining.

Filing Follies

We’ve all been there. You’ve spent hours on your return, feeling smug and self-assured. Then, with a click of the submit button, dread washes over you. Did you forget something? Did you use the wrong form for your pet rock collection (because, yes, VAT rules apply there too)? Deep breaths, everyone. VAT return blunders are a thing.

The Refund Rumble

There’s nothing quite like the thrill of a VAT refund. It’s like finding a forgotten banknote in your winter coat – a financial windfall delivered straight from HMRC! Just remember, with great refunds comes great responsibility (to spend it wisely, of course).

 

VAT returns might not be a walk in the park, but with a little humour and a helpful accountant, they can be a gentle breeze on a summer’s morning.

At Taxfile we take the ‘tax’-ing aspect out of VAT returns leaving you with the ‘value added’, focusing on what is important for you and your business.

We can run your VAT from start to finish; all you need to do is keep a digital footprint of your financial data.

The Early Bird Catches the Worm — The Benefits of Acting on Taxes Sooner

The Early Bird Catches the Worm — The Benefits of Acting on Taxes Sooner

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The Early Bird Catches the Worm — The Benefits of Acting on Taxes Sooner

by Ali at Taxfile.

For many self-employed UK taxpayers, the January Self-Assessment deadline looms like a tax-shaped storm cloud. But what if you could banish that pre-deadline panic and transform tax season into a breeze?

Psychology tells us that we are motivated when one set of thought processes outweighs the opposing ones, tipping the balance to make us act. With that in mind, here are 7 key things that may motivate you to act on your taxes sooner rather than later.

1. Knowledge is Power

Filing early gives you a clear picture of your tax bill. This allows you to budget effectively and avoid any nasty surprises come January. Knowing if you owe tax or are due a refund empowers you to make informed financial decisions.

2. Less Stress = Happier

If you owe tax, filing early lets you explore HMRC’s Budget Payment Plan. This lets you spread the cost of your tax bill over monthly or weekly instalments, making it much easier to manage.

3. Faster Refunds = Even Happier

If you’ve overpaid tax, filing early means a quicker turnaround on your refund. That extra cash can be a welcome boost for your finances.

4. Time is Money

January is a notoriously busy time for HMRC and accountants. Filing early ensures you avoid spending hours over the phone to HMRC, or your accountant having to contact HMRC on your behalf and spending over 45 minutes on hold.

5. Spot Errors, Fix them with Ease

Sometimes mistakes happen. Filing early gives you time to review your return and identify any errors. This allows you or your accountant to rectify them before the deadline, avoiding potential penalties.

6. Proof of Income, When You Need It Most

A completed Self-Assessment tax return can be used as proof of income when applying for a mortgage, loan, or certain benefits. Filing early ensures you have this documentation known as an SA302 readily available.

7. More Time for Tax Efficiency (if Needed)

If your tax bill is higher than expected, filing early gives you more time to explore tax-saving opportunities with an accountant (if necessary). In our experience, it also allows us to keep an eye on your turnover and spot early if you might need to be VAT registered, or are steadily moving towards it. It could also allow us to advise whether you’d benefit from setting up a limited company.

File Early — and catch the worm!

By taking charge of your Self-Assessment early, you gain control of your finances and avoid unnecessary stress. So, ditch the last-minute panic and embrace the benefits of early filing.

Contact Taxfile & Take Control

At Taxfile we would like to instil healthy habits in our clients and encourage you to come and see us in the early months after April. By doing so, we can file your tax return early and remove all the stress and worry.

Get ready by making an appointment to see our tax agents today. Call, message, or use our online booking system:

020 8761 8000 Book Appointment Contact Us

Taxfile are tax advisors & accountants in Tulse Hill, and Dulwich, South London.

Do I Need to Register for Self-Assessment?

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Do I Need to Register for Self-Assessment?

by Mohamed at Taxfile.

In today’s guide, we look at the rules around whether or not you need to register for Self-Assessment and submit a tax return to HMRC each year. Let’s take a look.

Reasons to Register for Self-Assessment

You generally need to register for a Self-Assessment tax return if your income isn’t taxed at the source, meaning the tax isn’t automatically deducted from your wages/salary. Here are some common scenarios where you would need to register for self-assessment:

  • You are self-employed — sole traders, freelancers, and consultants typically fall under this category.
  • You receive rental income — if you earn income from renting out a property, you need to register.
  • You have a high income — employees earning over £100,000 per year need to register as their tax calculations may become more complex. (From 2023-24 you are only required to register if your income is above £150,000).
  • You have other income sources — this includes income from abroad, dividends, and partnership profits.

If you are still unsure about registration, please contact HMRC or call Taxfile on 0208 761 8000.

Registering for UK Taxes is Important

Registering for UK taxes is important for a few reasons, as we’ll explain below.

Firstly, it helps you avoid penalties. If you don’t register for Self-Assessment when required, you could face penalties from HMRC. These can be significant, especially if you’ve been earning income for a while without registering.

Secondly, it helps to ensure accurate tax payments. By registering and filing a Self-Assessment tax return, you ensure you’re paying the correct amount of tax. Without it, you might underpay and owe interest, or overpay and have to wait for a refund.

Thirdly, it helps you stay legally compliant. In severe cases, failing to register and pay your taxes can lead to legal action, including prosecution.

Registering also helps you maintain good standing with the Government. Being registered with HMRC shows you’re taking your tax obligations seriously. This can also be important if you’re applying for credit, a mortgage, or a visa.

Do Directors Need to Do a Self-Assessment?

Not all directors need to do a Self-Assessment tax return, but some do. Here’s a breakdown:

Directors with only PAYE income

If your only income from the company is through PAYE (Pay as You Earn), where tax is deducted at source, you generally don’t need to do a Self-Assessment.

Directors with additional income

If you have any other taxable income besides your salary, like dividends, company benefits, or income from another job, you likely do need to do a Self-Assessment tax return in order to report it.

However, even if you aren’t required to register, HMRC might still ask you to file a Self-Assessment return.

Learn more about director self-assessment here.

Why is Payroll Important for a Director?

Payroll ensures compliance with tax regulations. Directors are considered employees for tax purposes, and PAYE is the system used to collect Income Tax and National Insurance Contributions (NICs) from their salary. Running payroll ensures these deductions are made and reported correctly to HMRC.

Payroll creates a clear and accurate record of your director’s salary payments. This is important for tax purposes, but also for things like calculating benefits and pension contributions that might be tied to salary.

Being on payroll allows directors to qualify for certain benefits they wouldn’t get if paid through dividends alone. These can include enrolling in a company pension scheme and accruing National Insurance credits that contribute to your state pension.

Payroll ensures transparency by helping to maintain a clear separation between personal finances and the company’s finances. This is important for legal and accounting reasons.

While there might be tax advantages to structuring some of your director’s income as dividends, payroll remains a vital part of ensuring you’re following regulations and have a clear record of your director’s overall compensation.

Learn more about how to pay yourself as a director here.

Contact Taxfile – Accountants & Tax Advisors

Tax and accountancy help for South Londoners

If you need any accountancy help for your limited company or small business, Taxfile is here to help:

020 8761 8000 Book Appointment Contact Us

Are you in the South East or London? Taxfile has offices in Tulse Hill, and Dulwich, in South London.

Demystifying the SA302: Your Tax Summary Explained

Demystifying the SA302: Your Tax Summary Explained

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Demystifying the SA302: Your Tax Summary Explained

by Faiz at Taxfile

An SA302 is a document issued by HM Revenue & Customs (HMRC) that summarizes your income tax calculation for a specific tax year. It shows how your tax bill was arrived at, including your income from various sources, any deductions and allowances, and the final amount of tax owed or refunded.

An SA302 can be essential documentation in various situations. For instance, you might need it when applying for a mortgage, a visa, or a business loan, as it serves as proof of your income and tax obligations.

How & Where to Get an SA302

If you need a copy of an SA302 there are various ways of obtaining them:

• If you have done your tax return yourself via HMRC’s portal, you can log into your Government Gateway and download copies of them;
• If you have used an accountant that uses external software, then your accountant can provide you with the calculations. It’s worth noting that HMRC has a list of lenders that will accept the tax calculations from the accountant’s software. If your lender’s name is not on this link, then you or your accountant would need to contact HMRC and ask them to send you one. This can take up to 14 days to arrive via post.

Avoiding Errors & Information Mismatches

At Taxfile we receive a lot of SA302s for our clients that have been sent to us by HMRC. This happens when there has been some error or omission on a client’s tax return that was submitted and didn’t match what HMRC had logged on their system. To explain:

HMRC holds the following information about each taxpayer:

• Student loans;
• Private pension contributions;
• PAYE income;
• Jobseeker allowance;
• Child Benefit along with salary information (so, if one of the parents was on a salary of £60,000* or more, then HMRC will recover some or all of the benefit);
* (£50,000+ for the tax years 2023/24 and prior)
• Registration for Class 2 National Insurance.

Because HMRC holds such information, our clients must check their tax returns carefully to ensure all the points mentioned above have been correctly covered and included in the tax return where appropriate. This is a crucial step when we provide the calculation and clients should also carefully read the declaration notes that are provided.

Tax or Accounting Problems?

Taxfile — help when you need it for tax and accountancy issues across South London


020 8761 8000 Book Appointment Contact Us

Taxfile are accountants & tax advisors in Tulse Hill, and Dulwich, South London.

VAT in the UK: a comprehensive guide including what it is, the different rates, registering, returns, reclaiming it, the different schemes and more.

Navigating the VAT Landscape in the UK: A Comprehensive Guide

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VAT in the UK: a comprehensive guide including what it is, the different rates, registering, returns, reclaiming it, the different schemes and more.

Value Added Tax (VAT), a consumption tax levied on most goods and services in the UK, plays a significant role in the nation’s economy. Whether you’re a sole trader, limited company business owner or simply a curious consumer, understanding VAT is crucial for navigating the UK’s tax system effectively. Today’s comprehensive guide explains what it is, the various VAT rates, when you need to be registered for the tax, VAT schemes, and more. Read more