At Templeton Brook Witt, we know that even though tax investigations are most likely inevitable, they are also very much feared by most people. Tax in itself can be complicated and hard to understand, even when only submitting a standard self-assessment tax return. However, we also know that there are certain measures that you as an individual or as a business owner can put in place to help avoid receiving the dreaded letter or phone call that indicates that you have been selected to be audited. Tax investigations completed by HM Revenue and Customs (HMRC) don’t have to be something to fear, when you are taking the necessary steps to remain compliant.
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tax investigation will be initiated by HMRC by sending you a letter of audit or phoning you. Once they make contact, they will tell you what about your return has resulted in you being selected. Furthermore, you will need to send any documentation outlined by HMRC to them, in order for them to thoroughly investigate you. The current laws in the UK stipulate that you have to comply with HMRC when selected for a tax investigation. This means that you will have no choice but to send them anything they request, or grant them access to certain documentation. The number one piece of advice we give here at Templeton Brook Witt, is to be open and honest.
Tax investigations are more likely to be triggered when there are certain obvious things that are cause for concern, for instance late submissions. Additionally, seeing a substantial variation between submissions could make HMRC want to take a closer look at your records. This could mean a substantial fall in either loss or income. If your costs are abnormally high for a standard business in your industry, this could increase the likelihood of being audited. You are also more likely to be selected if you operate in a high-risk industry, or if your records are inconsistent with how busy your business actually is. At Templeton Brook Witt, we help our clients to fully understand why they have been selected.
It is important to note that a small percentage of
tax investigations are triggered purely at random, and thus it is impossible to guarantee that you will never be selected. However, there are certain behaviours that are within your control that will help you to stay in the clear. Ignorance as an excuse is not accepted when it comes to mistakes made on tax returns. With that being said though, HMRC is not out to punish businesses who make honest mistakes. Regardless, it is strongly advised to ensure that the information submitted is correct. Being meticulous here could possibly save you the burden of a
tax investigation.
Tax investigations can also be instigated when HMRC receives a tip off relating to yourself or your business. Apply caution when it comes to discussing your tax affairs, or who you allow access to your financial records. It is all too easy for a third party to misconstrue information, or hear something out of context that can end up causing you a tax investigation. Another step you can take is to take note of HMRC’s compliance campaigns. These will give you insight into behaviours that are least likely to attract the taxman. You should also proactively explain anything out of the ordinary on your tax return. This ties into being open and honest, rather than waiting for HMRC to pick up the unusual parts of your return.
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tax investigation can also possibly be avoided by keeping business costs and expenses sensible and to make sure that you keep accurate records of every transaction relating to your business. Lastly, employing the services of a tax advisor is the single most effective step you can take to avoid a tax investigation. Templeton Brook Witt expert tax advisors have the necessary experience to help your business, whether you would like to put measures in place against a tax investigation, or if you have been selected for one already.
Get in touch with Templeton Brook Witt in London today to see how we can help you.
Your Trusted Advisors
Based in the landmark St. Mary Axe, Templeton Brook Witt provide specialist tax investigations, compliance advisory and employment dispute advice to private clients and corporates.
0207 889 1000
info@templetonbrookwitt.com
30 St. Mary Axe, The Gherkin
Level 28
London
EC3A 8BF
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