No business owner loves to be the subject of a routine tax audit or investigation by Her Majesty’s Revenue and Customs (HMRC). But there are some routine practices that, if followed, will lessen the likelihood of an audit or investigation. Here are five key actions to take:
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.
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.
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.
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.
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, consoider hiring an accountant to review your tax returns and submit your tax paperwork. This eliminates 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.
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.