Following HMRC’s disclosure that one in ten small businesses is under investigation in an attempt to get back the tax is failed to collect in 2015-2016, ICAEW has issued some advice to businesses who may be under scrutiny.
Keep invoices for sales and purchases; receipts for business expenses and bank records. Good records will also save you time and help you run your business more efficiently.
HMRC will carry out a compliance check on a self-assessment, corporation tax return or VAT return if they think that something is incorrect. For example, when figures appear incorrect, a business makes a large claim for VAT or one with a large turnover declares a small amount of tax.
Most cases are settled by reaching an agreement with HMRC or businesses can have ask for a review or appeal against most of HMRC’s decisions.
If HMRC decides to look at your business records they will usually contact businesses by telephone. The call should take between 10-15 minutes and HMRC will ask questions to make sure companies meeting their legal responsibilities.
From the replies, HMRC will assess whether a business can submit an accurate tax return from its records; if further action will be taken; if a business needs some additional help and support and whether the case needs a face to face visit.
HMRC will contact you to agree a date and time if they think a business requires a face to face visit. The visit will take around two hours.
Depending on the outcome of a compliance check or business records check a business may have to pay additional tax as well as facing penalties.
Clive Lewis, ICAEW Head of Enterprise, said: “Legally businesses have to keep records for income, VAT and employees. If HMRC announces that they are looking more closely at a company it can be both daunting and frightening for the business owner. If you are worried please contact an ICAEW Chartered Accountant for a free consultation using the Business Advice Service.”
Further information on what to do if a business is under investigation from HMRC and details of the ICAEW Business Advice Service can be found at www.businessadviceservice.com