The ever changing and complex nature of UK taxation requires highly specialist knowledge and, with the increased focus by HMRC on tax revenue recovery, it has never been more important to ensure that your accounts and tax submissions are compliant with HMRC legislation.
In recent years HMRC have stepped up efforts to recover the estimated £5bn in tax revenue which is lost each year. Mounting one of its largest ever responses, HMRC is investing over £100 million in a Taxpayer Protection Taskforce which will be comprised of over 1,200 HMRC staff who will work to combat fraud within the Covid-19 support packages that have been available throughout the pandemic.
Furthermore, HMRC’s supercomputer ‘Connect’ is designed to identify anomalies in income, expenditure and declarations, enabling them to identify and target those individuals who they believe have deliberately or mistakenly not paid enough tax.
There are a number of reasons as to why a business or an individual may be subject to an HMRC tax investigation including late filing of accounts, making tax submissions with continuous errors, using incorrect or inaccurate figures in tax returns, being a business within sectors deemed high risk and sudden increases or decreases in income resulting in inconsistencies between returns filed.
As well as taking up significant time for business owners, HMRC investigations can lead to companies incurring significant costs both in accounting fees but also in any liabilities owed in unpaid tax. Here are some simple measures that companies and individuals can take to avoid a tax investigation and the associated consequences.
Submit your tax returns on time;
Ensure your tax returns and any associated claims and elections are accurate, error free and in line with the latest tax legislation;
Explain any inconsistencies or irregularities to HMRC before they pick up on them; and
Make sure all of your accounting and financial records and invoices are accurate and recorded correctly.
At Verallo, our team can both help to ensure that your tax filings are accurate and timely whilst also maintaining tax efficiency. Our advisors are experienced in identifying any potential issues before HMRC do and will also advise on any tax relief incentives which can help reduce your tax bill. Contact us to find out more.