Self-Assessment Versus Professional Help: What Happens When You Make Filing Mistakes?

The UK’s Self-Assessment process is how HMRC collects tax from individuals whose income isn’t fully covered under PAYE. It applies to:

• Self-employed workers and sole traders
• Company directors
• Landlords and investors
• Individuals with multiple income sources (e.g. overseas income, dividends)
• Returns are due by 31 January following the end of the tax year (5 April). Payments on account for the next year are also due in January and July.

For full rules, visit GOV.UK – Self-Assessment Overview

Many people assume Self-Assessment means simply entering their income and paying what’s owed. In reality, there are dozens of potential pitfalls — especially if your finances aren’t entirely straightforward.

Common DIY problems include:

• Misreporting income from multiple sources
• Claiming ineligible expenses
• Forgetting tax reliefs (e.g. pensions, Gift Aid, marriage allowance)
• Missing or underpaying payments on account
• Submitting late or amending errors incorrectly

Each of these can trigger penalties or audits.

For example, HMRC’s system cross-checks your data against employer records, bank interest, and investment platforms. Even small discrepancies raise automated flags.

At Loyals, we often see clients who filed alone for years — until HMRC sent a notice of underpayment or launched a review.

HMRC distinguishes between three main types of mistakes, each carrying a different level of penalty:

1. Careless Errors

You didn’t take reasonable care — e.g., entered the wrong figure or forgot to include certain income.
➡️ Penalty: 0–30% of the tax owed.

2. Deliberate Errors

You intentionally understated income or exaggerated expenses.
➡️ Penalty: 20–70% of the tax owed.

3. Deliberate and Concealed Errors

You knowingly tried to hide information or falsify records.
➡️ Penalty: 30–100% of the tax owed.

HMRC may also charge interest on unpaid amounts from the date the tax was due.

Even if the mistake was unintentional, HMRC expects you to prove that you took “reasonable care.”

📎 Reference: HMRC – Penalties for Inaccuracies in Returns

If HMRC suspects an error, they can open an enquiry into your return. This can include requests for:

• Bank statements
• Invoices or receipts
• Business records for multiple years

For serious issues, they may extend the review up to six years back (or twenty if they suspect deliberate evasion).

During this period, refunds or credits are often frozen, creating short-term cash-flow strain.

An accountant or tax adviser can handle all correspondence, reducing your exposure and ensuring the right evidence is submitted.

If you voluntarily disclose the mistake before HMRC contacts you, penalties are usually reduced by up to 50%.

❌ Misunderstanding Allowable Expenses

Many self-employed workers claim personal costs — mobile bills, clothing, or travel — without correct apportionment.

❌ Forgetting Side Income

Freelancers often underreport small contracts or digital platform payments (e.g., Etsy, Upwork).

❌ Using the Wrong Accounting Basis

Choosing between cash basis and accrual accounting affects profit calculation and tax owed.

❌ Ignoring Payments on Account

HMRC expects advance payments if your bill exceeds £1,000. Many first-timers miss this, leading to surprise bills six months later.

❌ Missing the Filing Deadline

Even one day late triggers a £100 fine, increasing over time.

Each of these mistakes is preventable with professional review and digital systems.

Hiring a qualified accountant doesn’t just save time — it reduces your risk, stress, and total tax liability.

✅ 1. Accuracy and Compliance

Accountants ensure every figure aligns with HMRC rules and digital standards under Making Tax Digital (MTD).

✅ 2. Time Savings

What takes you hours or days takes a professional a fraction of the time — freeing you to focus on your business.

✅ 3. Optimised Tax Reliefs

Professionals identify all eligible deductions, from mileage to pension contributions, that DIY filers often miss.

✅ 4. Audit Support

If HMRC enquires about your return, your accountant can represent you directly — something DIY filers must handle alone.

✅ 5. Peace of Mind

Knowing your return is accurate and compliant lets you focus on running your business, not fearing the brown envelope.

Explore Loyals’ Self-Assessment Tax Return Services for expert help across all income types.

Emma, a London-based graphic designer, managed her own Self-Assessment for three years. She thought she was saving money until HMRC requested a review.

Her accountant later discovered she had overclaimed home office expenses and missed £2,000 in VAT reclaim opportunities. After amending her returns, she owed £400 in back taxes and penalties — but also reclaimed £900 in missed expenses.

Since switching to Loyals, her tax filings are automated, compliant, and audit-ready.

Lesson: professional help pays for itself.

If you realise you’ve made a mistake, act quickly:

1. Log in to your HMRC account

2. Choose the relevant tax year and click “Amend Return.”

3. Update the figures and resubmit.

4. Pay any outstanding tax promptly.

    

   You can amend returns within 12 months of the filing deadline. Beyond that, contact HMRC directly.

   Professional accountants can also handle the correction process, ensuring no secondary errors occur.

A single HMRC penalty or correction easily exceeds the cost of expert help — especially for multi-income or VAT-registered individuals.