If you’re not declaring all of your earnings, HMRC might want to investigate your business. It can seem daunting when HMRC reach out and say that they want to investigate, but it’s not always something you need to worry about.
If HMRC spots irregularities in your tax returns, it might cause them to gain more information. If HMRC does happen to find a discrepancy, your business could be faced with a fine – to avoid this from happening, make sure that you’re up-to-date with your business tax payments and stay in line with government regulations.
Whether you’re a small business, a big company or self-employed, HMRC could run an investigation at any given time – sometimes, at random. To find out more information about why HMRC might investigate your business, continue reading.
Reasons why HMRC Might Investigate your Business
If mistakes have been made regarding your self-assessment tax return, HMRC could investigate. Simply forgetting to tick a box, missing out on important information and skipping sections could indicate that your business hasn’t provided everything that it needs to.
If your business has failed to make much profit for a number of years, it’s clear that something isn’t working. HMRC aren’t here to scare you or punish your business – they just want to get to the bottom of things.
You’ve not committed a crime by forgetting to fill in specific information, all you need to do is get the case closed with HMRC and provide the right details to them. There are not many tips you can give to businesses that are enduring an investigation, the main thing you can do is give the right information and be truthful.
Can HMRC Run an Investigation at Random?
HMRC can run an investigation whenever they want, sometimes at random. An investigation can be triggered when HMRC checks your tax returns and realise there’s been a mistake. If the figures submitted to HMRC are incorrect, the chances of your business being investigated are high.
Apart from incorrect tax returns, there are a variety of other business-related payments that could flag up as being wrong. If a small business or someone self-employed makes a claim for VAT out of nowhere, HMRC could see this as suspicious behaviour.
Businesses with a large turnover shouldn’t be declaring small amounts of tax, but if they do so, HMRC could investigate further. Planning for an investigation is hard – 7% of tax investigations are selected randomly, making every business at risk.
Income tax and taxable income are both looked at by HMRC, later resulting in an investigation if they suspect something doesn’t add up.
What to Expect During an HMRC Tax Investigation
When you discover that your business is subject to an HMRC investigation, it can cause worry and confusion. Once HMRC begins their investigation, they’ll request information from you, which you’ll be obliged to give.
Information is required from your business to make sure HMRC has all the right statistics. If you believe that you shouldn’t have been investigated, you’re in your right to argue against HMRC – in most cases, the case will close as soon as they’ve checked over a few discrepancies.
If you pay taxes correctly, and stay on top of financial affairs regarding what money you need to pay as a taxpayer, you won’t be flagged up by HMRC.
How LJS Accounting Services can Help
LJS Accounting Services can offer expert start-up advice to businesses, making sure they know everything related to tax and HMRC. Our team can help your business by giving out the best help – something that many businesses need.
By having a reliable accountant from LJS Accounting Services to handle your financial affairs, the chances of HMRC wanting to investigate your business will be slim. Accountants help by allowing you more free time on other aspects of your company whilst our team at LJS deals with your finances.
Our team manages your accounts whilst acting as a support mechanism for when your business is dealing with things like investigations from HMRC. Your business will benefit massively by reaching out to LJS Accounting Services.
Keli Evans, Director at LJS Accounting Services, excels in taxation and statutory accounts. With a focus on strong client relationships, she leads a diverse portfolio, overseeing vital financial aspects like VAT, payroll, pensions, and taxation with a holistic and committed approach.