Tax Investigations can occur for many reasons and it doesn’t mean that your business is in the wrong. The HMRC could check any businesses during tax investigations, but there is no need to panic! Here are just some of the reasons tax investigations could occur.
Coleman & Co can deal with all business taxes to submit the correct finances by the deadline and prepare you for any tax investigations, if this situation arises. Tax investigations are usually launched if the integrity of your returns is in question, but there is usually a good explanation for this.
Regular Mistakes
This can often be the most common problem and the biggest sign that you might want to outsource your tax returns to professionals. The HMRC understand not everyone can get it quite right and the one-off mistake is usually not a big deal. However, if this continues to happen, they might get slightly suspicious.
Even if this is just due to carelessness, an investigation may be launched just to double check you are not trying to get one past them. If continual mistakes are made, your business reputation may not be in tatters, but it could affect your expenses in a negative way and lead to a lot of fines for incorrect tax returns.
Having an accountant could save you a large amount of money, ensuring errors are not made and you will not receive fines from the HMRC.
No Profit & Poor Standards
With the HMRC managing the expenses and tax returns of most businesses throughout the UK, they have a good understanding of the standard within the industry. If you are well below the industry standard or have no profit whatsoever, the HMRC may be suspicious. If you owe them a little amount of money or no money at all, tax investigations are on their way.
Especially if your business has continuously done this and still managed to keep running with such a little amount of money, tax investigations could be an obvious decision. There’s no need to worry about this situation as long as you record keep effectively to prove finances are correct. Tax investigations will only confirm that your business is possibly underperforming compared to competitors.
Accountants will make accurate returns but could also keep you out of tax investigations. The HMRC will look more favourably upon companies with an accountant as there is more chance of reliability.
Inconsistent Figures
Another reason tax investigations could be launched is due to inconsistent figures in all your tax returns. If there is a continual fluctuation, a tax investigation into your business should not come as a surprise.
Every business suffers from inconsistency and cash flow could drastically change, but this is not expected to happen. Having a steady profit and tax returns would shine your business in the best possible light. It could also mean you avoid tax investigations altogether.
Income Exclusion
In your tax returns, you must include every single payment that the business makes or intakes. No matter how little you think it could be, it will usually be part of your final tax returns, which is why it is so important to bookkeep effectively.
In addition to this, leaving out your transactions doesn’t mean the HMRC won’t see them. As they deal with millions of businesses throughout the UK, they will see the transactions from other businesses. The more businesses you trade with, the more likely your transactions will be found. If you decide to leave this income out of your final returns, it could spell trouble.
Contact Us
Tax investigations could occur for many reasons and we can always support your business during this. We can submit tax returns and offer guidance throughout tax returns to ensure no fines are ever given. For more information on the services we offer in Lisburn, contact us today. Call Coleman & Co on 028 9266 3599 or fill in our contact form to make an enquiry.