What could a tax investigation mean for your ... - Touch Financial

In the same way that many law-abiding drivers feel nervous when passing a police car, many honest business owners endure a sense of guilt when HMRC descend to inspect the books.

There?s no denying that a tax investigation is an inconvenience, even when you?re reasonably confident that the worst they?ll turn up is that you?ve recovered a little too much VAT on expenses. But there?s also that nagging doubt about whether you?ll be presented with a bill for thousands of pounds, because you?ve overlooked something fundamental.

The best insurance against a surprise tax bill, and the stress this would place on your cash flow, is to invest in the right finance processes as early as possible in the life of your business.

HMRC are currently embarked on a programme to recover unpaid business taxes by focusing on specific industries. They?ve already raised over ?4.5m by inspecting a thousand plumbers and they expect to gather ?3m from self-employed builders.

Other areas they are currently looking into are firms who?ve failed to submit the appropriate returns and those who?ve claimed VAT repayments. To HMRC, these are indications that businesses may not be keeping their books correctly, or might even be actively evading the payment of tax.

If your business has been late in submitting the required returns for VAT or other taxes, or in making payments, you are increasing the risk of being placed under the tax investigation spotlight. Other activities which will increase the chance of an investigation include failure to declare all your assets, or having low drawings, as this raises the question of what you are living on.

Preparing for a tax investigation

If you have any concerns about the issues an HMRC tax inspector might discover, you should seek professional advice from your accountant. They should have the experience of working with other clients who?ve been investigated, allowing you to benefit from their accumulated knowledge.

Another tactic for coming through an investigation with minimal damage is to be as open as possible. Even if you?ve made mistakes and face a bill and penalties, HMRC are likely to be more lenient if you are cooperative.

A tax investigation is not only disruptive to your day-to-day business; it can also put your cash flow under serious pressure if you?re required to meet an unexpected bill.

Fortunately, most businesses have several options for raising extra capital at short notice. At Touch Financial, we specialise in helping firms find the cash they need, sometimes in a hurry, in order to continue trading through a difficult patch.

If you?re looking for extra cash, either to bridge a cash flow gap or to fund business growth, why not call our finance team now on 0845 388 9725? A no-obligation consultation only takes a few minutes of your time and could open the door to the funding that your business needs.

Every month Touch Financial help businesses improve their cash flow with invoice finance. Request a quote to find out how much extra cash you could raise.

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Source: http://www.touchfinancial.co.uk/what-could-a-tax-investigation-mean-for-your-business/

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