Her Majesty's Revenue and Customs (HMRC) is the tax authority governing the United Kingdom. The department is responsible for enforcing customs and tax laws, minimum wage law and most importantly collecting taxes. Therefore, being a limited company and running a business, you should file accurate tax returns because you may invite an HMRC tax investigation London for inaccuracies, be they deliberate or careless.
As you can imagine. An investigation is a intrusive and stressful experience. Even though you feel you are doing things correctly and on time. Having an expert tax accountant in London to support you is one way of defending against being investigated by HMRC. Think about when you're selling your car, the car is worth more if you had it serviced by an expert. The buyer is likely to question things less. Without this the dealers stamp of approval, they will check things thoroughly and still doubt you even if the car seems to run smoothly.
Why is the investigation triggered?
- Inaccurate tax return submissions
- A reclaim of TAX or VAT
- Peculiar items or unexplained items on a tax computations
- Incorrect or wrong claims
These activities are the prime reason for a further inspection and often the main cause behind an investigation. But there could be some other reasons which could make your business enter the radar of HMRC. Some of them are;
- Receiving tip-off against your business activities
- Working in a high-risk industry
- Late tax filings
- Your standard of living not matching your declared income
- Inconsistencies in income tax computations and tax returns
Tax investigations are also random. Thus, businesses, often small ones with inconsistent incomes, should hire a limited company accountants in London for filling tax returns on time and accurately.
Also read: The stressful journey through a "discovery assessment" tax investigation
What is commonly checked in an HMRC tax investigation?
HMRC can check anything related to your income to make sure that you pay the right tax. Examples:
- The tax payable
- A tax refund claim
- Your business accounts
- The tax calculations
- VAT returns
- PAYE returns if you are an employer
- Company Tax Returns
How complex can the tax investigation be?
There are three levels of HMRC enquiry
These checks are routine enquiries and normal. HMRC can conduct the enquiry anytime, regardless of any peculiar misinterpretation in your tax return filing.
Full enquiry happens when HMRC consider major errors in your tax filing. They will review your business records and potentially enquire into the tax affairs of the director/shareholder too.
In this enquiry, HMRC only looks at particular aspects for obvious or suspected inconsistencies - for example a large expense that reduces taxable profits
What are the possible outcomes of the HMRC investigation?
A demand for tax unpaid together with interest (accruing from the date the payment should have been made) and penalties. The amount of penalty is complicated and depends on the behaviors of the taxpayer(s).
Accurate and timely tax filing is crucial. Whether small or big, businesses should use the services of a reliable limited company tax accountant to avoid making mistakes.
If you end up in a tax investigation Lancing Cotswold can help with HMRC tax investigations London.
In the case where a taxpayer has overpaid the tax, he will receive a rebate with the set interest maintained by HMRC. But if the taxpayer has paid less tax, he will be made to pay the required tax within 30 days. The tax payment includes the interest.
However, in the case of deliberate wrongdoing, a criminal case is formed or escalated against the taxpayer.
Therefore, as a business owner, you should remain attentive about the tax filings and should rely on experienced east London accountants. You can have high quality and professional tax accountant services from Lancing Cotswold. Visit the website to know more about their services and offerings.
You can also read: Bookkeeping For Sole Traders Here Is The Guide For Beginners