Would you be scared if HMRC came knocking?
‘Tax investigation’ – two words which can strike fear into the hearts of business owners. So how would you feel if Mr Tax Investigator came knocking?
No matter how honest you are and how much you think you are doing everything right, it can still be a bit disconcerting if you are visited by HMRC. However, by making sure you have good accounting records you can reduce the opportunity for the tax man to start picking holes.
So always make sure you keep all your business paperwork including the following
- Receipts for all your business expenses
- Copies (either electronic or hard copies) of all sales invoices
- Bank statements
- VAT returns
- Payroll records
It is also vital to have a good system in place for recording all your business transactions. We always recommend properly designed accounting software such as Sage, FreeAgent or Xero but if you are a bit of a technophobe, a good manual system is better than a poorly used software package.
If you do find yourself the subject of a tax investigation, be co-operative but only give the information you are asked for, and if you think HMRC are asking for information they are not entitled to, take professional advice. We offer all our clients third party tax insurance which will cover our fees in the event of them being selected for an investigation and also provides us with access to experts in this area.