Tax investigations are something that many business owners may have to go through. A tax investigation is often perceived as something bad but it can also be undergone at random or if your particular industry is being targeted by HM Revenue and Customs (HMRC).
Who can be tax investigated?
A tax investigation on your business may be brought up by HMRC if you are under suspect of hiding your income or fraudulent activities. There are certain red flags that HMRC can pick up on to suspect you of omission (leaving out information about your taxes). Some of these red flags include:
- Filing your tax returns late
- Filing your taxes incorrectly
- Income has dramatically increased in a short amount of time
- Income goes up and down substantially
- You are claiming high expenses in proportion to your income
Sometimes the tax investigations are random or can be done if you are in a HMRC target area. Target areas are industries that are known for being high-risk for tax fraud. This can be industries that regularly take cash payments or in a specific geographical area. Property income is seen as a common area for tax fraud and can often be a targeted sector.
What to do if you get investigated
HMRC will contact you by post to let you know that you are being put under investigation. When you get the letter, you should read it very carefully and if you feel that you are unsure about some of the information in the letter you should hire a professional accountant in Essex to give you support and advice.
How long will a tax investigation last?
Tax investigations are different so the length of one will vary. For aspect tax investigation, which only focus on a certain aspect of your taxes, can last from 3 months to 6 months. Full tax investigation can last from anything up to 16 months.
Can i opt out of an investigation?
You cannot opt out of an investigation. Once a tax investigation by HMRC is opened, you cannot appeal against it.
How far can HMRC investigate?
HMRC can go back as far as 20 years into your tax returns. However, they do not typically do this and will usually only go back as far as 6 years.
Penalties involved with tax investigations
In cases where they discover deliberate fraud, you will be prosecuted. This is especially true for cases where large amounts of VAT and PAYE are concerned.
In order to get through an investigation get in touch with a professional. Your Essex accountant can help you get through the tax investigation and help you get the right documents together. Tax investigations are made easier with C&C Accountancy in Hornchurch. HMRC can ask for invoices, bank statements, credit card statements, VAT records, payroll records and job quotes.
Save time and keep track of all bookkeeping for small business transactions as well as tax information with online bookkeeping software. Everything you need to do your business’s bookkeeping is right at your fingertips. Here is how it works.
With an Internet connection, you can access many programs. These programs link straight to bank accounts, PayPal accounts and more. You can see what your daily balances are and you can make payments directly through your online connection. You can enter daily sales and accounts receivables right online.
These programs also make invoicing faster, allowing them to be automatically generated. You do not have to worry about forgetting to invoice a vendor. The program does it for you. You can keep track of who owes your business what and you can follow up on past due accounts.
Different programs come with different features, and you will want to look for those that offer the most practical use. Avoid software that contains lots of fluffy features such as customized backgrounds and layouts. Choose software that is rich in performance features that you will actually need.
ick Books function on the double-entry method of accounting, which is better for advanced users. Look for software that is a good match for your level of accounting abilities.
Tax forms are a snap with accounting programs, and they can be invaluable when it comes to preparing your own tax returns. You can save money by doing taxes yourself instead of hiring an outside accountant.
You can do just about everything using software to prepare tax records. You can generate Schedule C’s as you enter expenses and purchases throughout the year. Employee tax forms like 1099s or W2s are also capable of being generated.
Most people are concerned about security when using any type of online program. With online accounting, this is a special concern. Programs come with read-only abilities making it impossible for changes to be made once they are entered and saved. Also, 256-bit SSL technology encrypts all data to keep it safe against potential hacks and computer viruses.
Invest time in finding a good bookkeeping program. It will help keep your records safe, help you keep track of revenue and help you prepare for taxes.
It is generally agreed that Business loans have a useful part to play in our management of everyday business finances – but only when used responsibly and with all due caution regarding the need for the loan in the first place, exactly how much it is going to cost you, and your absolute confidence in being able to make the repayment when it falls due. A small business accounting service can help.
Of course there are likely to be times when we might all welcome a little extra cash – but there is a difference between liking it and needing it.
As the government funded Money Advice Service points out, there are some things we may like, but simply cannot afford. These might include:
- tickets for concerts or sporting events
- new work suit or new computers and software
Expenditure in the face of an emergency – such as essential repairs to your car – however, might help you avoid further costs in the future and, therefore, warrant the short-term commitment to a Business loan.
Some commentators make even more clear their dislike of Business loans as a matter of principle. The popular finance website, Money Saving Expert, for example, has little good to say about this form of borrowing.
But the criticism is based largely on two factors: the seemingly high cost of borrowing when measured by its APR (annual percentage rate) and the failure on the part of some lenders to conduct their business with a transparency on which customers may safely rely.
However, in the case of lenders for example, the APR might well be high but it is important to keep in mind that this APR is a reflection of the annual interest rate, including compound interest. In reality, of course, a short term Business loan is only for one day or a maximum of 30 days (with a shorter repayment term paradoxically reflecting a higher APR). The loans also include a flat fee of £5.50 to help cover the costs of the lender’s fast transfer of funds to borrowers’ bank accounts.
Indeed, Wonga make it a central point of principle that all of the information on its website and all aspects of its lending are totally transparent – whatever the tricks, ruses or deceptions that some critics may level at other lenders.
It may seem obvious to point out that any kind of loan – including a Business cash advance – needs to be repaid when repayment falls due. Responsible borrowing, therefore, requires your 100% certainty that you are going to be able to repay your Business loan in accordance with your loan agreement – and without recourse to repaying one loan by taking out yet another one (the perils of which are discussed in greater detail in this article in Investopedia).
Provided you exercise due care and are responsible in your borrowing from reputable lenders, therefore, there seems every reason why the occasional use of short-term cash advances may play a part in normal, everyday personal finances.