Anyone do diy tax returns?

Landlord Discussion Property Investment
1

Hey,
I have a great accountant, but now that ‘tax is digital’, I wonder if I can do my own tax returns, and company accounts and save some money. I already track all income & costs in a spreadsheet, which I send to my accountant each year.

I see that Inland revenue is moving to digital filing for tax returns.

Everything is done through a limited company, and the accountant only does that for me, not my personal tax return.

Anyone use accounting/tax software that they would recommend?

Thanks, Mike

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It can certainly be done, but limited company has greater responsiblity then self assessment form. There are certainly more things to remember to submit (not only once a year tax return) otherwise face fine. My accountant charged me £85 per month to do my business account, so I think it worths the account fee.

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Accountants have spent years to act as a qualified accountants. He/she would be the right person to complete your tax returns.

How long did you spend in studying taxation? How about DIY surgery? No point being on NHS waiting list.

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Hi Aziz.
You sound a bit stupid.

I never studied plumbing but I manage that. I never studied electrics, but I manage to do that. There are many things that can be done DIY.

Now that Inland revenue have made tax digital,it should be simple to post tax returns, especially if there is software designed for the job. I have no need for any accountancy expertise, just to post my transactions onto the government system.

By the way - for info, I have previously studied accountancy. Not that it has any relevance to the question.

I don’t need idiots to challenge my question. I asked a reasonable question if anyone does their own tax returns.

Your unhelpful response is not appreciated.

5

Hi Jessie,
Appreciate your reply.
I guess I should feel lucky that I pay the equivalent of £75 per month.

regards, M

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I pay £ 540 a year Sounds like a good deal

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I’m an accountant and landlord, and have quite a few landlord clients. I would say that personal tax returns are probably fair game to do yourself if your affairs are straight forward (and I have happily trained some clients to do their own where they are simple). Limited companies are more complicated because of all the extra red tape. Eg how do you treat the money that you take out (salary/dividend)? What about money that you lend to the company? What costs can you legally put through? Trivial benefits? Mileage? Rules about your company lending you money. Do you do FRS102 s1a or FRS105 accounts (one has more disclosure, but you can revalue properties, which might be useful if you are remortgaging - but then you need to include a provision for the tax on the revaluation, the other is much simpler and puts less info on file, but doesn’t allow revaluations) etc etc. I have to say that I never prepare a set of accounts from client records without adjusting their figures. The other challenge is keeping yourself up to date on changes in tax rules - eg changes re interest deductions for personal properties (it’s not straight forward to calculate in all circumstances - eg what if you have a loss, correct treatment of remortgage fees etc) , changes in wear and tear -what’s a replacement, what’s an improvement? If you do want to do your own accounts and corporation tax returns, there is software out there (Taxfiler, for example), but there is a risk of rubbish in, rubbish out! It’s really not as simple as pasting your figures into a bit of software.

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I do my own, but they are dead simple, just one flat with no mortgage, and it is self-assessment. i would not attempt it for something more complicated.

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I never do my own. I staple all receipts together in date order. List all rents , list all sales income and expenses and give it to my accountant. I never add up the columns as I get it wrong even with a calculator ! His invoice is tax deducible anyway

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I have always done my own but our affairs are simple. I also used to do Ltd Co returns for a very small simple company. IMHO it was a lot more time consuming filing for HMRC & Companies House than personal self assessment. We also had a bigger Ltd company and those returns were done by an accountant.

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Been doing my own for 10 years now. One flat via self assessment. Form hasn’t changed much. I always have last years to hand to remind what figures and info go where

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I do my own as well. Only has one issue which was when I didn’t declare my main income (I thought it was totally separate being taxed ar source). I sorted out the error immediately but they still hit me with a 15% fine. Since then I’ve not had any issues competing the form myself, but I only rent out three properties.

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HI Tracy & Neil,
Thanks for the reply - I was getting overwhelmingly negative responses.
Do you use any software to support diy?
thanks, mike

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I just use my own records.

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It looks like Neil is doing self assessment returns not Ltd Co. if he is talking about leaving his main income off (as are others I think) which isn’t what you asked. I haven’t done any Ltd Co returns since MTD came in but when I did I used the HMRC portal rather than any specialist software. Things might have changed now.

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Interesting; at what point is it better to become a Ltd. company?

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To clarify I do my return via self assessment. Don’t use any software and don’t have a ltd co so its straightforward.

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I think the problem is that you feel people are being negative because they are not agreeing with you (eg I quite agree with Aziz - I have been an accountant for 30+years so it is all easy to me, but I would not attempt electrics etc - nor would it be legal for me to do more than the basic electrics - and because he didn’t say what you wanted to hear, you called him stupid, which was just rude and unnecessary!).

As I said, it is fair game to do your own self assessment if it is simple (but even though the form may look the same year on year it does not mean that the rules haven’t changed, so you need to keep yourself up to date and if you just copy from last years, you could end up in trouble, I did a tax return for a new client last year who had done his own the previous year - they had not restricted the interest, but had also not claimed repairs to the kitchen that they could have claimed, so I saved them money overall. Just got another client a £3k tax repayment going back 3 years).

Limited companies are a completely different thing, and from your reply to Tracy and Neil it sounds like you may not understand that.

Some of the big players in the mortgage market have refused to go into limited company lending because they feel that it is to easy to go into without getting proper advice (https://www.mortgagesolutions.co.uk/news/2019/12/09/bm-solutions-avoiding-limited-company-as-landlords-not-always-getting-right-advice-rickards/).

A company is a separate legal entity, not an extension of you. You have to do accounts in statutory legal format, with a full balance sheet. You can’t use cash accounting, so you have to calculate accruals and prepayments (ie if a tenant’s rent period starts on 30 March and your year end is 31 March, you have to defer the rent that relates to the period after the year end. Same with costs like insurance - you have to match them to the period). The accounts have to be filed in iXbrl format, along with a tax computation and return. Money that you take out of the company has to be salary, dividend or loan repayment - there are strict rules about borrowing from the company. Accountants can also advise on things like whether you could save tax by running a payroll as well as stopping you from getting into trouble for doing things wrong.

If you really want to do your own company accounts and tax return, I did point you towards some software - have a look at Taxfiler. That will do the accounts in statutory format, but it won’t tell you if the figures are wrong, or if you are using the most appropriate accounting standard.

I believe that you can also file accounts and tax via the Gov website (they did stop the service a while back, but I have just had a look and it looks like it might be back now: https://www.gov.uk/file-your-company-accounts-and-tax-return). Unless they have improved it since I last used it, it is not very user friendly.

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Neil - re your question on when (if) to incorporate: It is complicated!! Depends on your other income, how may properties, how much interest you pay, what your long term plans are, whether you are buying to flip etc etc. Incorporating an existing portfolio could be expensive because the normal way would be to sell your properties to the company at market value, so could crystallise capital gains (if you sell them at less, HMRC would still want the capital gains calculated on market value) and give you a stamp duty headache. If you are a full time landlord there may be some possibility of arguing that it is a transfer of trade to reduce costs. There are also wizzy tax schemes out there via trusts etc, but they don’t come cheap!

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The Government make recommendations for accounting software compatible for Making Tax Digital. There is also and API for use with a spreadsheet. That said, making tax digital for landlords has been delayed, though not so sure how this applies to landlords operating as a company.

However, I would adopt a hybrid approach. Quarterly reporting is just updating income and expenditure, nothing too taxing (forgive the pun), it’s largely data input. You can then get your accountant to do end of year for you. Your accountant should be able to cope with most off-the-shelf accounting packages or even a CSV file. Ask them for a recommendation.

PS: maybe get them to show you how to do reconciliation.