One of the most common questions we get asked by new business start ups is…
If the Taxman calls you and suggests he should visit your business as part of their Business Assurance programme, should you agree?
The Taxman is offering to visit new businesses to help them understand what sort of business records they should be keeping. During the visit the Tax Officer will ask the business owner how they record sales, purchases and expenses, how they handle cash, and how they calculate and record drawings or remuneration. Your answers to these questions will be recorded by the Taxman and amount to a “Compliance check”, which is another way of saying “enquiry into your tax affairs”
What may not be recorded is any advice given by the Taxman in answer to your own questions. For example, you may ask: ‘Is this expense tax allowable?’ If the taxman gives the wrong answer, and you act on it, you could be penalised in the future for getting it wrong. There is no comeback on HMRC for these errors!
Penalties for errors in tax returns are now dependent on your behaviour, so it is crucial that the Taxman does not form the impression that you have a careless approach to keeping business records.
If you are offered a business assurance visit, we suggest that you either politely decline, or ask us to be present to ensure you are not tricked into saying something that may incriminate you in a future tax investigation. For any advice you need, talk to us, not the Taxman!