A Beginner’s Guide: How to Outsource Self Assessment Tax Returns

26 August 2024

The Self Assessment tax season is upon us, and you know what that means—December and January are nothing short of chaotic. With countless clients to manage and deadlines looming, it’s no wonder that many accountants choose to outsource tax preparation.

If you’re considering this option but aren’t sure where to begin, this guide is for you. We’ll walk you through the process, from finding the right tax return outsourcing partner to understanding how the workflow operates once they’re onboarded. Let’s dive in.

Why Outsource Self Assessment Tax Returns?

Before we get into the how, let’s briefly touch on the why. The primary reason to outsource Self Assessment tax returns is that it can significantly lighten your load during the busiest time of the year. By passing this task to a reliable external provider, you free up your internal team to focus on more strategic tasks.

Plus, it can be more cost-effective than managing everything in-house, especially if your team is stretched thin.

Step 1: Finding the Right Outsourcing Partner

Your first task is to find an outsourcing partner you can trust. But where do you start?

• Do Your Research: Look for outsourcing providers with experience in handling Self Assessment tax returns for UK clients. Check their credentials, client testimonials, and case studies. A provider with a proven track record in the UK market is a good sign.
• Ask for Recommendations: Word of mouth is powerful. Ask your network of fellow accountants or industry colleagues for recommendations. They might already have experience with a provider who could be a perfect fit for you.
• Assess Their Security Standards: Since you’ll be sharing sensitive client data, it’s crucial to ensure that your chosen partner follows strict data security protocols. Look for GDPR and ISO certifications or other industry-standard security measures.
• Trial Run: Before you fully commit, consider starting with a small batch of returns to see how they perform. This will give you a good sense of their accuracy, speed, and communication.

Here’s a quick video to help you find the right partner effectively.

Step 2: Onboarding Your Outsourcing Partner

Once you’ve selected a partner, the next step is onboarding. This phase is crucial as it sets the foundation for a smooth working relationship.

• Kick-off Meeting: Start with a detailed kick-off meeting to discuss your expectations, deadlines, and the scope of work. This is the time to outline any specific requirements you have and ensure the provider understands your firm’s processes.
• Data Sharing Protocols: Agree on how data will be shared. Most reputable providers use a secure FTP (File Transfer Protocol) portal for this purpose. This ensures that client information is transmitted safely and is protected from unauthorised access.
• Assigning Roles: Clearly define who in your firm will be the primary point of contact. This person will liaise with the outsourcing team, answer any queries, and ensure that everything stays on track.

Step 3: The Outsourcing Process – How It Works

With the groundwork laid, let’s take a closer look at how the tax return outsourcing process works, step by step.

• Data Collection and Transfer: Once you’ve gathered all the necessary documents from your clients, you’ll upload them to the secure FTP portal. This might include income details, expense records, and any other relevant documentation.
• Processing the Returns: The outsourcing team will then begin processing the returns. They’ll review all the documents, input the data into the necessary tax software, and ensure that everything is in line with HMRC requirements.
• Quality Checks: After the initial processing, the returns will go through a series of quality checks. This is a critical step to catch any errors or discrepancies that might have been missed during the initial input. Reputable providers usually have multiple layers of review to ensure accuracy.
• Report Generation: Once the returns have passed all quality checks, the outsourcing team will generate detailed reports. These reports will provide a comprehensive overview of the tax returns, highlighting any areas that might need further attention or clarification.

Step 4: Reviewing and Approving the Final Output

After the reports are generated, the ball is back in your court. Here’s what happens next:

• Internal Review: Your team will review the tax compliance reports and the final tax returns. This is your opportunity to double-check that everything aligns with your firm’s standards and meets the client’s expectations.
• Client Approval: Once you’re satisfied with the returns, you’ll share them with your client for approval. If there are any changes or corrections requested, you’ll communicate these back to the outsourcing provider for adjustment.
• Filing with HMRC: After receiving the client’s go-ahead, the final step is filing the returns with HMRC. Depending on your agreement with the outsourcing provider, they might handle this step for you, or you might prefer to do it in-house.

Step 5: Continuous Improvement

Outsourcing is not a set-and-forget process. After the tax season, it’s worth conducting a post-mortem with your outsourcing provider. Discuss what went well and identify any areas for improvement. This will help you refine the process for the next Self Assessment season and ensure that you’re getting the most value and cost savings from your partnership.

Final Thoughts

Outsourcing Self Assessment tax returns can be a game-changer for your accounting firm, especially during the hectic end-of-year period. By following the steps outlined in this guide, you can find a reliable partner, onboard them smoothly, and ensure that the entire process runs like clockwork.

Remember, the key to a successful outsourcing experience is clear communication, robust security protocols, and a commitment to continuous improvement. Over 500 accountancy firms have already tried and tested this strategy and seen remarkable efforts in terms of time management, cost savings and improved efficiency.

So, take the plunge and give your team the breathing room they need to focus on what really matters—delivering top-notch service to your clients.

If you are curious to know how QX Accounting Services can help you this tax season, call us at +44 208 146 0808 or submit the form below to get a callback from an expert.

Must Read: Get Ahead of the Tax Season with Our Early Bird Offer

Dineshkumar Gadhavi

Dinesh is a seasoned accounting and tax professional with more than 20 years of experience, specialising in UK personal tax. He has a proven track record of streamlining tax processes and building strong client relationships, consistently delivering accurate and compliant taxation services tailored to client needs.

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