Deadline, what deadline?

Many new dentist clients move to my firm, UNW chartered accountants, as they are fed up with the fact that their old accountant makes this a last-minute exercise, which brings great stress, as the dentist must also liaise with the accountant in the last-minute panic. Consequently, there is no time to discuss business accounts and use the review exercise to improve profitability for the coming year. Furthermore, the size of the tax bill, which is also payable on 31 January, often comes as an unpleasant shock, with no time to build up savings.

In addition to accountants, there are dentists who only provide their information at the last minute. The best of all worlds is, however, when a well-organised accountant acts for a well-organised client. The timetable could go something like this (I have assumed an accounts year end of 31 March, the most common year-end date). On 1 April, the first-day business accounts could, in theory, be prepared. In practice, mid-May is the earliest date when all accounting information could be made available to the accountant. Assuming all information was made available at that time, draft accounts are made ready for discussion. Accounts then are finalised by the first week of June, while mid-June accounts information, together with personal tax information, is used to prepare a self-assessment tax return. Income tax and National Insurance contribution payments are finally made to HMRC the following 31 January calculated. How does this compare with your timetable for submission of your last tax return?

The example above would apply if you are a sole practitioner or associate. A slightly more complicated situation applies if you are in a partnership, when an additional partnership tax return is required. If your practice is incorporated through a limited company, then you will be either a director, shareholder, or more usually, both. In this situation, additional deadline days arise for filing of the limited company statutory accounts to Companies House (nine months after the company’s year end) and submission of a corporation tax return to HMRC (12 months after the year end, although the tax is paid nine months after the year end).

What information is required
Any salary, bonus or shareholder dividends received during the income tax year must be included on the individual’s self-assessment tax return.

Self-employment: Business accounting information. This will usually consist of some sort of record of transactions, for example manual books, spreadsheets or computerised accounting system (e.g. Sage, Xero and QuickBooks); bank statements (for all accounts including loan accounts); invoices for purchases; statements showing income (e.g. NHS schedules, capitation scheme statements and patient charges); copies of finance agreements; and any other evidence of any transaction in or out.

Employment: P60 forms/P11D forms.

Dividends: Dividend certificates.

Other income: Bank/building society interest certificates or statements, rental income and expenditure, and investment portfolio annual summaries.

Why does it take the accountant so long? Sometimes, because the accountant is badly organised or under-resourced, sometimes because of timing. In the example above, where information was supplied to the accountant promptly, the accountant would have had plenty of staff resources to carry out the work quickly. If you give your information to the accountant after say October/November, then your information will arrive at the same time as that of many other of the accountant’s clients. It is likely that the available resource is swamped by an overload of work and delays may arise (unless you are lucky!). Missing information may also come into play. One of the profit killers for accountants is when jobs have to be suspended when information is missing, and then picked up again. This causes great inefficiencies owing to the accountant having to refresh his or her memory before proceeding.

Therefore, make every effort to get your information to your accountant promptly, accurately and completely (i.e. nothing missing). Impress on your accountant that you would like a swift turnaround as otherwise he or she might assume you are very relaxed about timing. Suggest a timetable to work to, like the one above.

The introduction of Making Tax Digital, for most dentists in 2020, will mean that the above problem is multiplied by a factor of four, because quarterly tax returns will be required. Current HMRC proposals would make cloud -based accounting software essential, so for most self-employed dentists a huge change in the way practice transactions are recorded will be necessary.

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