Not only did all those that had registered turn up but we had 2 extra. And this for a subject that I had told Steve was boring and nobody would turn up!!!
Instead of ploughing through all the taxes that he could have done Steve started with
HMRC believes nobody pays the right amount of tax
What sort of tax are we talking about
We are talking about all taxes, from Income Tax, VAT, CGT, Inheritance Tax, Corporation Tax, PAYE etc., because they are all dealt with on a self assessment basis.
Who is responsible for paying the right amount of tax
You are responsible for calculating your tax, even if you have some else doing it for you. Although having a suitable qualified person doing the calculation could be a defence against some of the penalties
Why is it Important
Because even if you do not end up in jail, the time and stress that comes from an enquiry by HMRC is a serious distraction from your business, and the cost of that distraction and the lost opportunities could be significant even if ultimately there is nothing to pay.
How will you know there is a problem
Usually enquiries start with a letter from HMRC, but in serious cases (or better described as cases where HMRC suspect there is serious loss of tax) it could be a dawn raid. Very few of us will ever experience that.
Correspondence from HMRC to worry about or not to worry about
All correspondence from HMRC should b taken seriously and there is none that you should ignore. Even if they are sending you a refund!
Visits from HMRC
Visits from HMRC are usually arranged in advance, but in the exceptional situation when they simply turn up, with or without authority from a Tribunal or a Senior officer, they can be turned away with a reasonable excuse, e.g. the business owner is not there or they would wish to have there tax advisor or accountant present. Even if they are admitted they are not allowed to search, so make sure that anything you don’t want them to see is not in vision. Neither will they want to use your computers, they may ask for copies of data but they will always allow you to get it for them.
If the police are in attendance or they have an order signed by a judge you need immediate professional advice.
The taxpayer is guilty until proven innocent
Nowhere in the boundless amount of legislation does it say that the taxpayer is guilty until they are proven innocent, what it says is that the Inspector Of Taxes Must satisfy themselves that the taxes reported as due are correct.
How do they do this:
They have statistical models that show what could be expected from your business, they have IT systems that link all information in government departments, they read the press, the letters that come in from ex-wives/lovers and disgruntled employees, and the information that other organisations, such as banks, have to disclose to them.
If they see something that in their opinion calls your tax return into question they will start an enquiry.
If they discover something then they will raise assessments and these will stick if they have used reasonable judgements. But what they cannot do is to reengineer what your business could have done.
Once they have decided what profit/income you have under-declared you will have penalties applied to it.
YOU HAVE BEEN WARNED
Nick Butler 18/04/18
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