How Long does it Take Accountant to do Tax return

How Long Does It Take an Accountant to Do a Tax Return in the UK?

Tax returns are an essential part of financial management for individuals and businesses in the UK. Whether you’re a self-employed professional, a small business owner, or a landlord, filing your tax return accurately and on time is crucial to avoid penalties and ensure compliance with HM Revenue and Customs (HMRC) regulations. Many people choose to hire an accountant to handle their tax returns, but one common question arises: How long does it take an accountant to do a tax return in the UK?

The answer depends on several factors, including the complexity of your financial situation, the quality of the information you provide, and the efficiency of your accountant. In this blog, we’ll explore the process of preparing a tax return, the factors that influence the time it takes, and tips to ensure the process is as smooth and quick as possible.

Understanding the UK Tax Return Process

Before diving into the time it takes to complete a tax return, it’s important to understand what a tax return entails. In the UK, a tax return is a document submitted to HMRC that details your income, expenses, and other financial information for a specific tax year (which runs from April 6 to April 5 the following year). The most common type of tax return is the Self Assessment tax return, which is required for:

• Self-employed individuals
• Company directors
• Landlords
• Individuals with significant income from investments or savings
• Those with income from abroad

The deadline for submitting a paper tax return is October 31, while the deadline for online submissions is January 31 of the following year. Missing these deadlines can result in penalties, so it’s important to plan ahead.

How Long Does It Take an Accountant to Prepare a Tax Return?

The time it takes an accountant to prepare a tax return can vary significantly depending on the following factors:

Complexity of Your Financial Situation

• Simple Tax Returns: For individuals with straightforward income sources (e.g., a single job or pension), a tax return can often be completed in 1-2 hours.
• Moderate Complexity: If you have multiple income streams (e.g., self-employment, rental income, or investments), the process may take 3-5 hours.
• High Complexity: For business owners, landlords with multiple properties, or individuals with overseas income, the process can take 10-20 hours or more.

Quality of Records Provided

• If you provide your accountant with well-organized and accurate records, the process will be much faster. Poorly organized or incomplete records can delay the process significantly, as the accountant will need to spend time clarifying details or requesting missing information.

Accountant’s Workload and Efficiency

• During peak tax season (January and February), accountants are often inundated with work, which can lead to longer turnaround times. Choosing an accountant with sufficient resources and expertise can help ensure your tax return is completed promptly.

Communication and Responsiveness

• Delays can occur if there is a lack of communication between you and your accountant. Promptly responding to queries and providing requested information can help speed up the process.

Use of Technology

• Accountants who use modern accounting software and tools can often complete tax returns more efficiently. These tools can automate calculations, reduce errors, and streamline the submission process.

The Step-by-Step Process of Preparing a Tax Return

To better understand the time involved, let’s break down the steps an accountant typically follows when preparing a tax return:

Initial Consultation

• The accountant will meet with you to discuss your financial situation, income sources, and any potential deductions or reliefs you may be eligible for. This step usually takes 30 minutes to 1 hour.

Gathering Information

• You’ll need to provide the accountant with all relevant financial documents, such as:
• P60 or P45 forms
• Bank statements
• Invoices and receipts
• Records of expenses
• Rental income details (if applicable)
• Dividend or interest statements
• The time required for this step depends on how organized your records are.

Data Entry and Calculations

• The accountant will input your financial data into their accounting software and perform the necessary calculations to determine your taxable income and tax liability. This step can take 2-10 hours, depending on the complexity of your finances.

Review and Verification

• The accountant will review the completed tax return to ensure accuracy and compliance with HMRC regulations. This step typically takes 1-2 hours.

Submission to HMRC

• Once the tax return is finalized, the accountant will submit it to HMRC on your behalf. This step is usually quick, taking 15-30 minutes.

Follow-Up and Advice

• After submission, the accountant may provide advice on tax planning, payment deadlines, and strategies to minimize your tax liability in the future. This step can take 30 minutes to 1 hour.

Tips to Speed Up the Tax Return Process

If you want to ensure your tax return is completed as quickly as possible, consider the following tips:

1. Organize Your Records: Keep all your financial documents well-organized and up-to-date throughout the year. This will save time when it comes to preparing your tax return.
2. Provide Complete Information: Ensure you provide your accountant with all the necessary information upfront. Missing documents or unclear details can cause delays.
3. Use Accounting Software: If you’re self-employed or run a business, consider using accounting software to track your income and expenses. Many software programs can generate reports that make it easier for your accountant to prepare your tax return.
4. Communicate Clearly: Maintain open and clear communication with your accountant. Respond promptly to any queries they may have.
5. Plan Ahead: Don’t wait until the last minute to start preparing your tax return. The earlier you begin, the more time your accountant will have to address any issues that arise.

Common Mistakes That Can Delay the Process

Avoiding common mistakes can help ensure your tax return is completed on time:

• Incomplete Records: Failing to provide all necessary documents can lead to delays.
• Errors in Data Entry: Mistakes in income or expense figures can require time-consuming corrections.
• Missed Deadlines: Waiting too long to start the process can result in rushed work and potential errors.
• Lack of Communication: Failing to respond to your accountant’s queries can slow down the process.

How Much Does It Cost to Hire an Accountant for a Tax Return?

The cost of hiring an accountant to prepare your tax return varies depending on the complexity of your finances and the accountant’s experience. On average, you can expect to pay:

• Simple Tax Returns: £150-£300
• Moderate Complexity: £300-£600
• High Complexity: £600-£1,500 or more

While hiring an accountant may seem like an additional expense, it can save you time, reduce stress, and potentially lower your tax liability through expert advice and planning.

Case Studies: Real-Life Examples

To provide a clearer picture, let’s look at a few case studies that illustrate how long it might take an accountant to complete a tax return in different scenarios.

Case Study 1: Simple Tax Return

Client Profile: Sarah is a freelance graphic designer with a single source of income. She works from home and has a few business expenses, such as software subscriptions and office supplies.

Process:

1. Initial Consultation: 30 minutes
2. Gathering Information: 1 hour (Sarah provided all her invoices and receipts in an organized folder)
3. Data Entry and Calculations: 1.5 hours
4. Review and Verification: 1 hour
5. Submission to HMRC: 15 minutes
6. Follow-Up and Advice: 30 minutes

Total Time: Approximately 4.75 hours

Case Study 2: Moderate Complexity

Client Profile: John is a landlord with two rental properties. He also has a part-time job and earns interest from savings.

Process:

1. Initial Consultation: 1 hour
2. Gathering Information: 2 hours (John provided bank statements, rental income details, and P60 form)
3. Data Entry and Calculations: 4 hours
4. Review and Verification: 1.5 hours
5. Submission to HMRC: 15 minutes
6. Follow-Up and Advice: 1 hour

Total Time: Approximately 9.75 hours

Case Study 3: High Complexity

Client Profile: Emma runs a small business with multiple income streams, including online sales, in-store sales, and freelance consulting. She also has income from investments and a rental property abroad.

Process:

1. Initial Consultation: 1.5 hours
2. Gathering Information: 5 hours (Emma provided detailed records but needed to clarify some expenses)
3. Data Entry and Calculations: 12 hours
4. Review and Verification: 2 hours
5. Submission to HMRC: 15 minutes
6. Follow-Up and Advice: 1.5 hours

Total Time: Approximately 22.25 hours

The Role of Technology in Tax Return Preparation

Modern accounting software has revolutionized the way tax returns are prepared. Tools like QuickBooks, Xero, and FreeAgent can automate many aspects of the process, reducing the time required and minimizing errors. Here’s how technology can help:

• Automated Data Entry: Software can import bank transactions and categorize them automatically.
• Real-Time Collaboration: Cloud-based platforms allow accountants and clients to share information and collaborate in real-time.
• Error Detection: Built-in checks can flag potential errors or inconsistencies.
• E-Filing: Many software programs can submit tax returns directly to HMRC, saving time and reducing the risk of submission errors.

The Importance of Tax Planning

Beyond just preparing your tax return, an accountant can provide valuable advice on tax planning. This involves strategies to minimize your tax liability and ensure you’re taking advantage of all available deductions and reliefs. Some common tax planning strategies include:

• Pension Contributions: Contributions to a pension scheme can reduce your taxable income.
• Capital Allowances: Claiming allowances on business assets can lower your tax bill.
• Income Splitting: Distributing income among family members can take advantage of lower tax rates.
• Tax-Efficient Investments: Investing in ISAs or other tax-efficient vehicles can reduce your tax liability.

The Impact of Late Submissions

Failing to submit your tax return on time can have serious consequences. HMRC imposes penalties for late submissions, which can increase the longer you delay. Here’s a breakdown of the penalties:

• Initial Penalty: £100 for missing the deadline, even if you have no tax to pay or have already paid your tax.
• Daily Penalties: After three months, you may be charged £10 per day, up to a maximum of £900.
• Additional Penalties: After six months, you may be charged an additional £300 or 5% of the tax due, whichever is higher.
• Further Penalties: After 12 months, another £300 or 5% of the tax due may be charged.

In addition to financial penalties, late submissions can also trigger an HMRC investigation, which can be time-consuming and stressful.

How to Choose the Right Accountant

Selecting the right accountant is crucial to ensuring your tax return is completed accurately and on time. Here are some factors to consider when choosing an accountant:

1. Qualifications and Experience: Ensure the accountant is qualified and has experience handling tax returns similar to yours.
2. Reputation: Look for reviews and testimonials from previous clients.
3. Fees: Compare fees from different accountants to ensure you’re getting good value for money.
4. Communication: Choose an accountant who communicates clearly and is responsive to your queries.
5. Technology: Consider whether the accountant uses modern accounting software and tools.

The Benefits of Hiring an Accountant

While it’s possible to complete your tax return on your own, hiring an accountant offers several benefits:

1. Expertise: Accountants have in-depth knowledge of tax laws and regulations, ensuring your return is accurate and compliant.
2. Time Savings: An accountant can handle the complex and time-consuming aspects of tax preparation, freeing up your time for other activities.
3. Tax Savings: Accountants can identify deductions and reliefs you may not be aware of, potentially reducing your tax liability.
4. Peace of Mind: Knowing your tax return is in the hands of a professional can reduce stress and give you peace of mind.

Conclusion

The time it takes an accountant to complete a tax return in the UK depends on various factors, including the complexity of your financial situation, the quality of your records, and the efficiency of your accountant. On average, a simple tax return can take 1-2 hours, while more complex returns may require 10-20 hours or more.

By staying organized, providing complete information, and maintaining clear communication with your accountant, you can help ensure the process is as quick and smooth as possible. Remember, hiring an accountant is an investment in your financial health, and their expertise can save you time, money, and stress in the long run.

If you’re looking for professional assistance with your tax return, don’t hesitate to reach out to a qualified accountant. They can guide you through the process, ensure compliance with HMRC regulations, and help you make the most of your financial situation.