Declaring Interest on Tax return necessary if below the threshold?

glock339

To try & cut a long story short I usually do my own tax returns via Cash Basis for a very small business that I run alongside my full time employment.

For year 2021-2022 I made a loss of a couple thousand pounds due to buying a lot of new stuff for the business, which I'm hoping to expand as I have left my employment. I thought it might be an idea to change to Accrual so I could claim the losses against the tax I paid on my income. It was a bit beyond my knowledge so I thought I'd get an accountant involved & as I was extremely pushed for time I went via Tax Scouts online as they had very good reviews.

I noticed the accountant didn't ask for details of interest from savings I'd earned so I messaged him about it & he replied it was not necessary to declare if you are under the threshold to pay tax on it, but he'd change the return & enter it if I wanted. In the 1 phone call you get with them I said I'd prefer it if he did amend the return & enter the interest. However after checking as far as I can tell he didn't bother.

He also said a few other things, which seemed very laxed but he is supposed to be the expert so I thought I best ask, does the interest need to be entered & if so what is the best way to rectify this? 

Any thoughts would be most appreciated 

Dazed_and_C0nfused

Yes, unless it's less than £1 it needs to be declared.

A tax return is to declare all taxable income.  You don't pick and choose!

And what "threshold"?

glock339

The threshold of interest from savings you are allowed to earn before you pay tax on it, I could be wrong but I think it's £1000 (for basic rate income tax band)

I always though if you were bellow this threshold that you still had to enter it on your return, even though its a major pain for seemingly no reason.

Jeremy535897

If you complete a self assessment tax return, you should declare all interest received (unless it is below £1) even though it may well be tax free due to the personal savings allowance. If you are able to amend your tax return, you can do so and include it, but if you can't, don't lose sleep over it.

Did the accountant claim the loss relief for you?

glock339

Yes the accountant did claim the loss relief for me.

I logged onto HMRC a few days ago to see if I could make changes & I didn't get very far to be honest but I'll have to try again & see if I can figure it out.

glock339

I recently watch a Youtube video day about someone in an almost identical situation to mine. The only year he paid an accountant (to claim loss against earnings) the accountant didn't enter his savings interest. The following year he done his own return & did enter his savings interest & apparently he got investigated because HMRC wanted to know how he'd suddenly went from no savings interest to whatever he declared that year because his declared earnings couldn't have accumulated that much money for him to save. In the end he explained his way out of it but he got grilled over that & almost every other aspect of his business for months, which took up quite a bit of his time answering questions, collecting evidence, writing emails & phone calls etc.

I think everyone could do without that.

glock339

I've tried again to amend my return via HMRC's website, I can look at all the returns I have completed in the past but I can't even view the return the accountant submitted on my behalf.

Is this normal & if so how do you make changes to a return submitted by an accountant on your behalf?

The one off fee I paid won't cover me for anymore help from the accountant & to be honest I have very little faith in them anyway due to this & a few other things I have not mentioned. 

Jeremy535897

That scenario sounds more like the seventies and eighties, or at least before self assessment, when human beings in the Inland Revenue actually looked at tax returns and (rarely, at least in my experience, it has to be said) made intelligent judgment calls like the one you describe. Nowadays the banks tell HMRC, with differing degrees of accuracy, what interest they have paid taxpayers, and that can be compared (by computer) with tax return entries. Should HMRC raise the issue, they should raise it with your agent, and your agent can explain to them why they didn't enter the interest on your tax return, despite being told to by you to do so.