SJB & Co Chartered Accountants

Avoiding Tax Investigations – 5 Actions you must take

No business owner wants to be the subject of a routine tax audit or investigation by Her Majesty’s Revenue and Customs (HMRC). There are some routine practices that, if followed, will lessen the likelihood of an audit or investigation. Here are five key actions to take:

1. Keep accurate and up-to-date financial records

One of the most important things you can do to avoid an audit or investigation is to keep accurate and up-to-date financial records. This means having a record of all your income and expenses and any assets and liabilities. HMRC can request these records any time, so it’s important to have them readily available.

2. Pay your Business taxes on time every time

Another routine practice that will help avoid an audit or investigation is paying your taxes on time. This means paying the correct amount of tax and filing your tax returns on time. HMRC can assess penalties for late tax payments or filings, so promptness is important.

3. Declare all your income and assets to HMRC

It’s also important to declare all your income and assets to HMRC. Why? Because HMRC may question why you haven’t declared certain income or assets, which could lead to an audit or investigation. This includes income from employment, self-employment, investments, property, or other sources. You should also declare assets such as property, vehicles, or savings.

4. Cooperate with any HMRC investigations

If, after taking all the routine practices above, you are the subject of an audit or investigation by HMRC, it’s important to cooperate with them. This means providing any requested records or information promptly. It’s also important to be truthful and forthcoming with information. Lying or withholding information from HMRC will only make the situation worse.

5. Get professional help if you’re unsure about anything tax-related

If you’re ever uncertain about anything tax-related, it’s best to get professional help. This could be from an accountant, tax lawyer, or other tax professional. They can help ensure you take all the necessary routine practices to avoid an audit or investigation.

When it comes to taxes, consider hiring an accountant to review your tax returns and submit your tax paperwork. This reduces the risk of any mistakes or late filing and significantly reduces your chances of being investigated.

Note: Unless you are 100% sure of your position, you should take professional advice as soon as a tax investigation or inspection starts.

Minimise the likelihood of an investigation

By taking the routine practices above, you can help avoid an audit or investigation by HMRC. But remember that if HMRC ever contacts you for an audit or investigation, it’s important to cooperate and get professional help.

Finally, tax investigations can happen despite the best practices being followed. Consider subscribing to a tax investigation service which will cover the professional costs of dealing with HMRC enquiries so you do not need to worry about the professional costs of lengthy enquiries.

For more information or to discuss any issues raised above please contact Simon Bell by phone on 01376 571358 or email [email protected] .


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