OVER 600,000 British micro-businesses admit to missing their tax return deadlines and a third to being overwhelmed by the burden and complexities of accounting.
That’s the stark scenario to emerge from new research from cloud accounting outfit FreeAgent.
The research, conducted by YouGov, suggests that poor organisation and inadequate systems may be one of the key reasons for accounting anxiety, as one in five (20%) micro-business owners confess that their main method to manage their financial accounts is via pen and paper, while almost one in six (17%) said they did not have immediate access to all of their important financial data.
Ed Molyneux, co-founder and CEO of FreeAgent, said: “Anxiety about your accounts is a clear warning sign that you’re not on top of the numbers. To counter this, we recommend micro-business owners put robust systems and practices in place. The more organised you are, and the easier you make it to manage your basic accounting, the less likely you’ll be to feel overwhelmed or anxious about your finances.
“When it comes to tax returns, it’s important not to panic if you miss a deadline. Filing your tax return late can be a scary prospect but as long as you do it as soon as possible – and settle your fine and actually pay the tax you owe – you should be able to avoid extra fines and scrutiny. And remember if there is a legitimate reason why you haven’t filed a tax return on time, HMRC will hear these reasons through a ‘reasonable excuse’ form and potentially cancel your fine. But the problem won’t go away by ignoring it.”
Some 8% admitted that they feel “very anxious” about completing their self-assessment, VAT and corporation tax returns.
Such concerns appear to be reflected in the research, which found that that 13% of micro-businesses – equivalent to around 650,000 UK-wide – admit to missing tax return deadlines, with nine per cent (or around 450,000 micro-businesses) receiving fines.
While the fine for failing to file a tax return is only £100, the longer a business takes to submit a tax return after the deadline, the higher the fines it incurs. HMRC may also start to charge additional penalties and interest on unpaid tax as time goes on.