Money Matters

10 ways accountants can make the self-assessment process easier

Follow these tips to help your clients prepare for self-assessment and make this busy time of year smoother for your accountancy practice.

With deadlines for self-assessment tax return submissions in October and November, these are particularly busy months for you and your fellow accountants.

The majority of people in Ireland will be submitting their tax returns in this period (31 October 2023 is the official deadline; the extended Pay and File deadline is 15 November 2023 for those who pay and file through ROS (Revenue Online Service)), meaning it pays to be prepared.

And with more people earning money themselves through blogging, renting rooms via the likes of Airbnb and other online activities, there’s more need for you to be able to offer support around tax returns.

People have two options when it comes to their returns: they can fill them in and file them by themselves or get an accountant to do it.

A lot of people opt for the latter, which is a wise decision as it can typically save them money and reduce the stress of enquiries from Revenue.

To help you along the way, here are 10 tips to make this busy period as easy as possible for you and your clients, including starting early, being aware of preliminary tax and the benefits of using cloud accounting software.

Here’s what we cover:

1. Reach out to clients early and follow up

2. Confirm tax liabilities with clients as soon work is complete

3. Avoid kicking the can down the road

4. Beware of preliminary tax

5. Ask your clients to use a separate bank account for business activities

6. Make your clients aware of the higher rate of tax

7. Check Capital Gains Tax payments

8. Know your clients and their tax credits

9. Make sure your clients can make payment

10. Encourage your clients to use software to manage their accounts

We know some clients will be disorganised and trying to prepare a set of accounts is the last thing they will want to do. Obviously, it will help to look after the clients who are prepared and like to get their books in earlier in the year.

Lots of clients will have accounts based on financial periods ending before December, so these are always a good starting point in January.

For those clients who are perennially last minute, it can help to reach out to them early and then follow up during the year.

Stay up to date with self-assessment

Want to keep up to speed with the latest updates on self-assessment? Sign up today to receive the Sage Advice newsletter, straight to your inbox.

Sign up now

It helps to confirm clients’ tax liabilities early in the year. You may like to do this in person, however it can also be done over the phone.

Once you have agreed the liability with your client, it’s best practice to write them a letter confirming the payments that need to be made.

This will also remind them of the funds needed in their account to make the payment due.

Remember, just because you confirm a client’s liability early in the year doesn’t mean you need to hit the button submit in ROS until closer to the submission deadline.

We all have lots of clients who don’t like to pay tax. One way of temporarily moving a tax liability is through a client’s balance sheet.

As smaller clients’ accounts are often largely based on cash, it can sometimes be difficult to prepare an accurate balance sheet.

Recognising expenses too early or not recognising debtors in a timely manner may reduce a client’s tax bill in the current year, however it will increase it next year.

The problem with a client who doesn’t like paying tax this year is that they won’t like paying tax any more next year.

By managing a client’s expectations this year, you can make next year’s self-assessment discussion a lot easier.

Preliminary tax can make bad new worse as the effects of a surprise tax liability will effectively double the impact of the bad news.

Preliminary tax can be a little complicated for clients to understand.

In the current year, your clients can opt to settle their preliminary tax in one of three ways, as according to Revenue:

  • Pay 90% of the tax due for that year
  • Pay 100% of the tax due for the immediately previous tax year
  • Pay 105% of the tax due for the tax year that preceded the immediately previous tax year (this is known as the ‘pre-preceding year’).

It’s worth noting that the 105% option only comes into play when you pay by direct debit and where tax for that year wasn’t nil.

One thing you can do for your clients in these situations is to help them forecast revenue for the current year, which may help to reduce their preliminary tax liability.

Read more about self-assessment

Producing accounts and preparing a self-assessment return is a lot easier when your clients maintain a separate bank account for their business or taxable activity.

If they are organised enough to transfer drawings to a personal account each month, this will make reconciling the bank easier and give you peace of mind when it comes to making sure you have captured all expenses when completing their tax return.

The largest jump in tax liability you are likely to see is when a client moves from the lower to the higher tax band.

Clients are often ill-prepared for the large jump in tax when they hit this level, which can make the self-assessment process more painful.

If a client is around this level, they need to be aware that taking on extra work will incur taxes effectively at 50%. This means there will be an effective saving of 50% on any additional expenses incurred at this point.

Many clients will see the benefit in outsourcing bookkeeping and other services to their accountants particularly with these kinds of savings.

Capital Gains Tax (CGT) will need to paid in the year it is incurred (unless it is incurred in December, that is). While the return is completed as part of the Form 11, CGT will need to be paid in advance.

Failure to do this will incur interest and penalties and capital gains can often mean large payments.

If you only find out about capital gains when completing a client’s tax return and they have not paid already paid CGT, it’ll be too late.

Make sure you know your client’s background so you can claim all credits available to them.

For example:

  • Do they have children in college?
  • Are they planning investing in a new business?
  • Are they helping with the cost of caring for a parent?

All of these cash outflows have the potential to result in tax credits and savings for your client.

It’s a knowledge of tax credits and other more complicated elements of self-assessment where you can provide top assistance to your clients.

It seems like an obvious point to make, but make sure your client has funds in their account to meet the RDI (ROS Debit Instruction) of their tax liability if you are submitting their return online via ROS.

While some of your clients will be super-efficient with their accounts, there will no doubt be those who turn up with a shoebox of receipts for you to decipher.

At this busy time of year, you’ll want things to move smoothly and quickly.

Speak to your clients and encourage them to make the move to software.

By using good cloud accounting software, they’ll be able to record their income, costs and paperwork.

So when it comes to you sorting their tax return, you’ll have easy access to their numbers all in one place.

Final thoughts

In the main, the self-assessment process can be made easier for you by front loading as much work as possible, understanding the situations of your clients and managing their expectations to help mitigate any unpleasant surprises.

Editor’s note: This article was first published in October 2019 and has been updated for relevance.

Self-assessment expenses guide for your clients

Help your clients see how they can save more of their hard-earned money and ensure they pay the right amount of tax when it comes to filing their tax returns.

Download your free guide