Common tax return mistakes and how to avoid them
The mistakes that come up most often when preparing tax returns, and simple year-round habits that keep the return correct and on time.
Most tax return problems do not start on filing day but during the year: an invoice that was not recorded, an expense with no document, or an account that was never reconciled. These are the most frequent mistakes and how to avoid them. Note: tax rates, registration thresholds and filing dates change from time to time, so no figures are given here; the rules and dates currently in force should be confirmed with the office or the tax authority.
1. Waiting until the last day
Filing at the last minute multiplies the chance of error and leaves no time to obtain a missing document. Set yourself an internal date well ahead of the official one, and keep the dates of all periodic and annual returns in a single calendar.
2. A return that does not agree with the books
The figures in the return must come from closed, reconciled books. Before filing, agree total sales and purchases to the invoices issued and received, and to what was already filed in the periodic returns for the same period, and explain any difference in writing.
3. Expenses without supporting documents
An expense that is not backed by a proper document may not be accepted as a deduction. Ask for an invoice in the name of the business for every expense, keep proof of payment, and do not rely on memory or the bank statement alone.
4. Mixing personal and business spending
Paying personal expenses from the business account, or the reverse, distorts the results and makes the return harder to defend. Keep separate bank accounts and record the owner’s drawings in their own account.
5. Neglecting e-invoices and counterparty details
With the spread of electronic invoices and receipts, your transaction data is available to the tax authority for matching. Make sure customer and supplier details and registration numbers are correct, and that what you issued and received electronically is recorded in your books as it is.
6. Overlooking other periodic obligations
The annual return is not the only obligation; there are usually periodic returns and taxes withheld on dealings with others or from wages. Neglecting one affects the rest of the file, so ask for the list of obligations that apply to your particular activity.
7. Not keeping a copy of the file
Keep a copy of every return and its supporting schedules, reconciliations and payment receipts, organised by period, for as long as the law requires. In any later examination you will find what you need in minutes.
In short: a correct return is the result of monthly organisation, not a seasonal effort. A simple monthly close and regular bank reconciliation shorten preparation time and reduce risk.
Note: this article is general accounting and tax information for awareness and is not professional advice on a specific case. Tax rates, thresholds and dates change, so confirm the rules currently in force with the office or the tax authority.
