How can you reduce your chances of a tax investigation?
For anyone who runs their own business, one thing probably strikes fear into them than anything else – the dreaded tax investigation notice from HMRC. Whether you are a large limited company or sole trader, HMRC can select you for closer inspection at any time. Naturally, this can be a stressful experience even though you will have done nothing wrong and not something that you would wish for. Unfortunately, there is no way to eliminate the risk of this happening but you can take some steps to make it less likely.
Ensure you play with a straight bat
Probably the number one thing you can do is forget about trying to exploit any legal loopholes around tax and simply meet all the tax compliance laws honestly. HMRC are becoming ever more sophisticated at spotting people who are trying to play games with their tax return, so it is just not worth it. If you play everything straight down the line, you are less likely to be seen as worthy of closer inspection.
Submit your returns on-time
The other really big thing you can do to reduce your risk of a visit from HMRC is to submit your tax returns on-time. As well as saving you lots of money in late penalties, this will avoid you coming to the attention of the tax inspectors as someone of interest. In simple terms, they will assume a business who submits their return in good order is well run and not trying to hide anything.
Be careful what information you share
As noted above, the UK Government is becoming ever more vigilant when it comes to the tax returns you submit. This means you can sometimes be caught out by information you share via mediums like social media. If you announce news of a big £1 million deal on your Twitter account but that hasn’t been included in your tax return, you will have some explaining to do and it could well trigger a full investigation.
Let Livingstones Accountants help
As you can see, there are some simple ways to reduce the risk of being the subject of a full tax investigation. However, it can often be genuine errors in a tax return that cause an investigation to be launched. To help avoid this, why not contact us today to prepare your tax returns? As professional UK accountants, we have the expert knowledge and experience to make sure your tax details are always correct.