How To Avoid A Tax Inspection
Like most things in life, prevention is better than cure, so, here is a list of some of the main reasons you might get that dreaded brown envelope landing on your door mat.
Repeatedly Late Reporting
If you are always late in submitting VAT returns or payroll reporting, this will raise their suspicions!
Not Registering For VAT & Maintaining Turnover At Just Under The Threshold
Every business owner wants to grow their business. Hitting the VAT registration threshold, if not prepared, can have a major effect on a business. If your business sees a couple years of growth then suddenly stops just below the VAT threshold, HMRC may think you have opened up a second business, to split sales, or might not be declaring sales.
Big Variances In Figures – Turnover, VAT, etc
Could just be the way you trade (but that might be attributed to sector variances) however, it is a red flag if there is no pattern to the way your sales, taxes and profit are reported.
HMRC Tip Off
Whether it is a competitor, ex employee or disgruntled customer, HMRC does act on tip offs.
You Do Not Have An Accountant
Unless you are an accountant or book keeper, you are more likely to make mistakes if you do not have anyone looking after your books.
Forgetting To Declare Income
Don’t forget that in all cases, transactions are at least two sided and a third party is paying money to or receiving from you. If they declare something that does not tally with you, HMRC’s alarm bells start ringing!
Just A Random Thing
Whilst they possibly do not draw your name out of a hat, HMRC does look at particular sectors in detail and they will also randomly select businesses to review.
With the length of investigations ranging from several months to a few years, how would you cope if HMRC came knocking?
Most businesses, quite rightly, would pass things over to their accountant, but many do not realise that they have to bear the costs, even if HMRC do not find anything, which could be several thousand pounds! This is why YBC brings peace of mind to thousands of business owners across the UK who know they are covered by our financial protection policy, designed just for issues like this.
With protection starting at just £149, click here for more information and to join.