Are you making any of these key business tax mistakes?
Managing business tax can be tough if you've never done it before. We'd obviously recommend giving a specialist - such as us - a call to ensure you don't make any costly mistakes. With that in mind, here are some of the most common errors businesses make on their taxes.
Deducting non-business travel
While you're legally permitted to deduct any necessary travel expenses from your taxable income, HMRC have become more and more strict on this in recent years, especially on expenses that are a mix of business and non-business (travelling to London for a trade show, but afterwards meeting a friend for dinner and drinks, for example). It can get very tricky trying to work out the ins and outs of what you're allowed to claim, and many businesses still get it wrong.
Claiming employees as freelancers
Another issue that's become more problematic in recent years. A lot of businesses depend on freelancers due to fluctuations in demand throughout the year. However, some businesses miscalculate which workers can be classed as freelancers and which can't. Again, the lines are somewhat blurred. In some cases, even freelancers using company equipment can be classed as employees. This can be a costly mistake to make as it may be necessary to make compensatory PAYE payments should HMRC investigate.
Not keeping up with PAYE or VAT schedules
HMRC are very strict on this issue. If your company is unable to meet PAYE or VAT payments, it's possible they may take legal action. They're certainly likely to issue penalties and in the more extreme cases can even issue winding up petitions. Managing payments can be time-consuming, however, which is why many businesses still miss them. This is one of the main reasons sensible businesses out-sourced their accounts.
Not keeping detailed records and receipts
The chances are that if you work with a skilled accountant, you won't ever be subject to a HMRC investigation. However, it's still completely essential to ensure you keep a record of everything, as well as any necessary documentation that backs up your accounts. Receipts, invoices, booking documents for travel, you name it: you must be able to demonstrate every claim you make. You'd be surprised how many businesses simply don't, though, and pay the price as a result.
Contact our Tax team today for more advice and guidance on managing your business tax correctly.
Contact Robin our tax partner:
Tel: 01825 745945
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