Businesslike is best with your accountant
It pays – quite literally – to co-operate with your accountant and make life as easy for them as possible, says Dr John Couch
This is the time of year when we all groan with displeasure as our accountants' reminders for personal tax details arrive.
Those of us with March 31 accounting year-ends also face the double whammy of digging out our personal expenses records from dusty filing cabinets and piles of unsorted mail and paperwork.
It is tempting to curse our financial colleagues – but the penalties for lack of respect can be terrifying.
The days have long gone when we could get away with passing a cardboard box of jumbled records to our accountant. At the beginning of each year we should receive a quote representing the minimum fee to be charged for records that are in apple pie order. You will have noted that most accountants now also charge a considerable extra fee (about £150) for completion of our annual superannuation certificate. Therefore to ensure the final fee does not bring unpleasant surprises you must present figures as clearly and comprehensively as possible. Every extra hour you spend on your records could avoid extra charges of about £100-£200 per hour.
The foremost tip is to keep a file from the beginning of the tax/accounting year and to put every relevant letter, interest statement, dividend and receipt in it as soon as you receive it. This reduces the chance of information getting lost: it also vastly reduces your preparation time at the year end. Subdivided files allow more refined category filing.
Most accountants now produce a questionnaire. Complete this carefully as it is designed to be fully inclusive and to allow easy data transfer onto their own spreadsheets in the correct order. If you want to be really smart you can either ask for an electronic version, or recreate last year's spreadsheet format on Excel, enter the figures yourself and e-mail this as an attachment to save more accounting time. If you make a headings list from last year's questionnaire you can also ensure that you save all relevant records for both personal tax and accounts. Another tip here is 'if in doubt save it'.
If you have incurred any new or unusual expenses or income, include a clear explanation in a covering letter, sent with your records. This will reduce the risk of further accountants' missives, which will not only cost you more but also take more time.
Respond to your accountant's requests and queries as quickly and comprehensively as possible to avoid last-minute palpitations for late details too close to the Inland Revenue penalty period. Many accountants are also good at responding to e-mails, so if you prefer to work this way, encourage your accountant to do the same, saving more time in the process.
Far more GPs now have mixed income sources so it is vital to include and label these correctly.
Remember that 'prior shares' of practice income such as seniority and rent reimbursement will be dealt with via the partnership accounts. Do not include them under personal income or they risk being counted – and taxed – twice.
Finally ensure that any personal superannuation payments – those not already included in the partnership records – are shown clearly to aid completion of your superannuation certificate.
Another useful by-product of all this diligence is that you will quickly build up more financial knowledge and may almost look forward to completing future year-end details.
Dr John Couch is a GP in Ashford, Middlesex