HMRC Tax Investigations: Should You Be Worried?
It's easier to get investigated than you think ...
POSTED BY JONATHAN VOWLES ON 05/01/2016 @ 8:00AM
According to HMRC's calculations, the current tax gap is £34bn, with 44% of the tax gap attributable to SMEs failing to declare and pay the right amount of tax ...
No one wants to be subject to a HMRC tax investigation and it's easy to feel swamped if you are!
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That is £15bn extra per year that HMRC are looking to get from small and medium businesses. If you run a business, then this probably means you!
The government has promised HMRC a further £800m to pursue non-compliance and tax evasion, with £300m to be spent on targeting SMEs and wealthy individuals, and a further £36m focused on trusts, pension schemes and non-domiciled individuals.
"There is a common misconception that HMRC do not have enough staff to deliver the compliance targets being demanded!"
I can assure you that the figures tell a different story and HMRC has over 26,000 people who are involved in some form of action to deliver the extra revenue demanded by Chancellor.
Do you need to be worried?
Every business owner, indeed every taxpayer, needs to be aware that you can be picked up for investigation by the taxman. Each year some people are picked on at random and others are chosen on the basis of information received.
HMRC's powerful and comprehensive Connect computer system is used to target individuals and businesses for tax investigation.
What can you do to protect yourself? Firstly, take out the appropriate insurance to cover the costs of being investigated by the taxman - your accountant should be able to help with this.
Secondly, keep your invoices, receipts and bank statements! UK tax law requires you to keep your business and accounting records for a minimum of 6 years and 10 months.
Thirdly, keep good records - speak to your accountant about your financial systems and processes to see if anything should be improved. Finally, if you are unlucky enough to be investigated, speak to an accountant who knows how to help.
Worried you may not be ready for an HMRC tax investigation? Maybe you're unsure of what's taxable in your business? Maybe your records are a shambles and need to be organised? Maybe you don't have a proper accounting system? There are many reasons you should be worried.
"But one thing you don't have to worry about is the level of help JVCA can offer you!"
If you'd like to put your mind at rest, why not call me on 01234 752 566 or click here to ping over an email enquiry and let's arrange a coffee and a chat at my offices in Cranfield?
Until next time ...
If you're looking for a new accountant to help grow your business, do visit www.jvca.co.uk and discover how Jonathan Vowles Chartered Accountants can help you!
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.