January 24. 2017
Let’s talk about how and
why HMRC Investigations happen, this week’s tip explains the best way to deal
with an enquiry and keeping the taxman happy.
Once the Revenue has taken up
an enquiry, it is in the taxpayer’s interest to settle the enquiry as speedily
as possible by cooperating with HMRC and providing them with any information
they request as they do have statutory powers that they can put in place if
they don’t get the information that they require within specified periods of
time.
The length of an investigation
can vary from months to sometimes years depending on what HMRC find and how
they decide to progress. During an
enquiry, the Revenue may well look at your personal expenditure as well as your
business records. It is important that
you can also account for entries on your personal bank, building society and
credit card statements as well as your business statements. The Revenue will often deem receipts that you
cannot account for as undisclosed business income.
Clearly, the best way to
avoid having an enquiry into your tax return, is to ensure that when your tax
return is submitted it includes accurate and complete accounts information and
that it also gives full details of all your non-business income such as any
bank or building society interest, income from property, Capital Gains
etc. This may be stating the obvious but
it can only be achieved by keeping full and accurate records:
-You should always record all
sales and business receipts as you get them and retain the records;
-You should keep back-up
records, for example, invoices, bank statements and paying-in slips to show
where the income came from;
-You should record all
purchases and other expenses as they arise and ensure, unless the amounts are
very small, that you have, and retain, invoices for them.
It is important that each
entry is recorded as and when it happens.
By doing this, it reduces the chance of you omitting or entering an
incorrect amount if you have to record it on your records some weeks or months after
the event.
You will see from this how
important it is for you to keep accurate records in both your personal and
business dealings. By doing this, the
chances of you getting a letter from the Revenue will be considerably reduced. However, if you are unlucky enough to still
be selected for an enquiry, your hand is much stronger when you can produce
accurate, well-kept and timely records.
The FBTC online cashbook is a
great way to record your business income and expenditure. Have a read of the FBTC Online Cashbook
"Simplicity at its best!"
If you have any questions
about Revenue investigation or the online cashbook, please get in touch;
Call 0344 984 4445 Email info@fbtc.co.uk