1 in 10 UK small businesses undergoing an HMRC investigation
HMRC confirmed in April this year that one in every ten UK small businesses is currently under investigation for tax that was not paid in the 2015/6 tax year. If you're worried about an HMRC investigation into your business finances, the following tips and information could help:
Good record keeping helps smooth the process of any HMRC investigation
If you keep all the paperwork related to business sales and purchases, retain all bank statements or keep a tally of bank details, and ensure all expenses are covered by relevant receipts, any investigation will be much more smooth and speedy. Ultimately, all these records should be maintained as a matter of course, although some small business owners find it difficult to combine the daily operational requirements of the business with financial obligations.
HMRC run compliance checks on businesses for a number of reasons, including when they feel mistakes have been made on self-assessment forms, VAT returns or corporation tax returns. Types of returns likely to cause investigations would be when businesses declare much smaller profits than usual or unusually large claims for VAT are made. It's typical in these circumstances to come to an agreement with HMRC, but it is possible to ask for any decisions to be reviewed or make an appeal if they are felt to be unfair.
Investigation of business records
When HMRC make the decision to investigate your business records they will initially call you and conduct a brief 10 - 15 minute telephone interview to ascertain your business is meeting all legal obligations. The results of this conversation will dictate if HMRC feels your business is capable of submitting correct tax returns and whether any further action will be taken. They may decide you need a face-to-face visit, if this is the case for your business you can expect the visit to last at least two hours. The results of any investigation may mean your business is liable to pay additional tax and could also face penalty charges.
If you're struggling to meet your legal obligations with regard to business tax, our accountancy practice and tax advisory service in Seaford and Uckfield may provide the solutions required. Get in touch for details. Speak to our Business Services Partner Robert using his contact details below:
Tel: 01825 763366
Business Services Partner
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