We would all like to avoid being selected for a tax investigation by Her Majesty’s Revenue and Customs. These
tax investigations can place a huge burden on you in terms of time and administration and are stressful for anyone. It is recommended that you have expert advice on hand from a company such as Templeton Brook Witt in London, if you do get selected for an investigation. Tax investigations are done to verify that you have been paying the right amount of tax and continue doing so, but being selected for an investigation does not imply that there’s any wrongdoing on your part. A
tax investigation may be launched simply to clarify a part of your tax return, or HMRC may wish to take a closer look at your financials, in some cases going back up to twenty years. The administrative burden this places on your business is obviously immense and stressful. You may be found at fault and even fined, so it really is best to let the professionals deal with complicated tax investigations. There are certain things that raise red flags to HMRC and might increase your chance of being investigated.
There are several reasons you might be selected for a tax investigation. Around 7% of selections are made at random, but unusual activities on your accounts may raise suspicions. Even innocent behaviour may seem suspicious and need a closer look. Activities that raise suspicion include submitting incomplete, incorrect, or late tax returns. Your small business might raise suspicion if it makes an unexpectedly large claim for VAT. Keeping on top of your books and administration really pays off in the long run as it makes accurate and timeous filing that much easier. Don’t make the mistake of thinking that tax investigations are only done on income tax: you may also be investigated for PAYE, VAT, and other taxes. HMRC sees some industries as more prone to fraud, for example, those that mainly do cash trade, or individuals with multiple income streams. Even when you are completely innocent but happen to do business in one of these higher-risk categories, it’s best to make sure all your documentation is in order and up-to-date so that the inevitable tax investigation is as painless as possible. A good accountant will help you keep track of your income and expenses, and consultants like Templeton Brook Witt can take care of the burden if you do get selected for an investigation and can help with preventative measures.
Full HMRC tax investigations can last from several months to several years depending on the level of errors and adjustments identified. This can be a nightmare for anyone, but Templeton Brook Witt’s barrister-led advisory service can make the pain much lighter. While you can never fully protect yourself from a tax investigation especially if you’re operating in a high-risk industry, there are simple steps you can take to decrease your risk. Accurately keeping track of your business finances makes sense and can help you make better business decisions, apart from escaping HMRC’s suspicious gaze. HMRC may choose to conduct an aspect investigation if it only needs clarification on a particular aspect of your tax return. A full HMRC tax investigation is a very serious matter in which HMRC believes there is a significant risk of error in your returns and a possibility of tax evasion and you can incur a heft HMRC penalty. If you become aware of any anomalies in your tax return, it is best to bring them to the attention of the investigator as soon as possible. Working with an expert team such as Templeton Brook Witt will help you to get the tax investigation done as smoothly as possible. As an expert tax investigation specialists with decades of experience in all matters tax-related and will be sure to provide you with the best advice.
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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.
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