How to reduce the chances of HMRC investigation
Anybody who runs a business today should be concerned with the HMRC investigations. It is because when your company grows, the possibility of an investigation also increases. And, with regards to how HMRC undertake their investigations, the chances of your business being inspected have risen considerably in recent years.
If the HMRC suspect that your business is doing things incorrectly, it will select your business for a compliance visit. Thus, you need to take some important things in consideration for reducing the chances of HMRC tax investigation.
File your returns on time
It’s very important to fill your returns before the deadlines. For filling your returns on time, you should know your VAT quarterly filing deadlines, your company tax filing deadline, the PAYE filing deadlines and personal tax return deadlines.
Pay your tax on time
If you pay your taxes on time, it reduces the chances of inspection in the first place. VAT and other taxes can be paid by using direct debit cards and credit cards respectively. However, you need to allow 3 working days for your payments to reach the HMRC despite the speedy transactions made between banks.
Keep accurate business records
Accurate record keeping is very crucial. Having accurate record keeping will help you to answer any queries made by the HMRC about any tax or accounting transactions. The records include hard and soft copies of all your invoices, receipts, business bank account statements, share certificates, loan agreements, and dividend vouchers. Remember, they must be complete and accurate.
Review your accounts
After your accountant prepares your financial accounts, you also need to review it. If you find there is something unusual with the prepared accounts, ask your accountant about it.
Get advice from your specialist accountant
Your accountant can discover changes from one year to the next that can increase the chance of an HMRC inspection. Big changes in turnover or gross profit rates will make put in more danger of an investigation when drawings taken from the business or remuneration paid are not enough.
Get insurance
As some accountants offer their clients fee insurance to protect the company from paying extra accountancy fees to deal with a HMRC enquiry. You need to have such accountant by your side. It is because it will ensure you have expertise for dealing with HMRC’s tax enquiries.
HMRC can easily recognize a fraud easily, so do not hide anything from HMRC. Tax investigations can be your nightmare so do the above mentioned things to stay away from a HMRC tax investigations.
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