Tax Investigations – Our 3 Favourite Ways To Manage The Problem

Share Button

Tax Investigations - Our 3 Favourite Ways To Manage The Problem

We don't know if you got the chance to read our previous post on how to avoid Tax Investigations.

Unfortunately, even if you follow all our 3 favourite tax investigations avoidance tips (and the three bonus tips), you can't completely avoid the possibility that you are selected for an investigation.

Remember, the tax rules are complex that it is not always easy to know in advance whether you have complied with all the rules. This can result in a few sleepless nights and makes for tense tax investigations visits!

However, if you are selected for tax investigations, there are steps you can take to make the process a little less, err, taxing.

If you are faced with tax investigation then we suggest you come to love your tax inspector.

Be especially nice to the Taxman when he turns up and keep your fingers and toes firmly crossed that he is in a good mood!

Tax Investigations - What Is The Taxman Entitled To Have!

Let's say that the worst happens and you receive a letter from the Taxman saying you are under “full investigation”.

It is likely that he will ask for all your business records to be handed over. So what should you do?

He is entitled to inspect your books but he cannot require you to send your records to his office.  So it is up to you where the Taxman inspects your books.

You might be inclined to allow the Taxman to inspect your books at your premises.  However in our experience this can cause additional problems. The Taxman will get a chance to have a snoop round your premises and this could result in additional questions being asked. Are there better alternatives? We think so!

Tax Investigations - 3 Ways To Manage The Pain!

Tax Investigation - Our 3 Favourite Ways To Avoid The Problem

Tax Investigation - Our 3 Favourite Ways To Avoid The Problem

These are our 3 favourite tips to manage tax investigations:

Tax Investigation Tip 1 - Start taking control and speak to him first.

Ask him why he's enquiring and offer to explain your business to him. He's probably picked you for inspection because his computer has identified that one of your performance indicators (i.e. gross profit margin) is out of line with other businesses in the same sector. If you can explain why it is out of line it could restrict the scope of his visit.

Tax Investigation Tip 2 - Have the Inspector examine your books at your accountant's premises.

This has the advantage that the Taxman can't snoop around or ask you on the spot questions. Instruct your accountant to tell the Taxman to put any queries he has in writing. That takes the pressure off you giving snap answers.

This is another reason we endorse Xero, as the records can be accessed online from the cloud anytime, anywhere!

Tax Investigation Tip 3 - Offer the Taxman half a day to inspect the records.

You have to give the Taxman reasonable access, so he can ask for more time depending on the complexity of your records, but try and set boundaries at the outset.

 

Here are another 3 great tips to help you manage tax investigations you might face:

Tax Investigation Tip 4 - Do not allow him carte blanche to take copies of everything he asks for.

Ask him to mark up all the pages he would like a copy of. Then offer to copy them for him and send them to him in the post.

This has two advantages:

  • it has been shown that it reduces the amount of copies he takes
  • you can see what it is that the Taxman has found so interesting to instigate the enquiry in the first place.

Tax Investigation Tip 5 - Do not allowing him to take copies of computer data files.

Just offer to give him the hard copy print-outs. This will stop him from putting your data through his own computer interrogation software he keeps back at the Tax Office.

Tax Investigation Tip 6 - Don't let him have them for an unreasonable length of time.

If you do end up giving him your records, tell him that you need the books back in order to run your business.  This will prevent him from going over your books again and again and again in order to find something, however trivial, in order to justify his enquiry.

If you are worried about your accountant will charge you fees for this, then make sure you cover this matter when you engage them.  A good accountant will ensure your risk is minimised, and help you answer any queries as part of their fees.  If you are still worried, then we always recommend joining the FSB, where tax investigation costs are covered by the membership fee.

Remember - Because any return can be selected for enquiry, keep all the documents and information you used to prepare your tax returns at least until the time limit allowed for the Taxman to make an enquiry has passed (ideally six years).  This is another reason why we recommend Xero to all our clients because all this is stored in the cloud and accessible at any time!

Our Tax Investigations Call To Action

As we have said before, tax investigations are not on the list of things business owners should look forward to experiencing.

You can minimise the risks of getting one or multiple tax investigations by following our top tips from the previous post.

In the past 13 years, we have only seen 1 full investigation and 10 partial investigations amongst our client base.  However, the longer you are in business, and the bigger you get, the chances for tax investigations do rise.

Hopefully the tips above will ensure your visit goes off without serious incident.

If you know of any other great tips for managing tax investigations that can be shared with our readers then let us know via the comments or through LinkedIn.

If there's one message we want you take away from this post is to not allow yourself to be the Taxman's punchbag  Fight back and TAKE CONTROL!

The PJW Call To Action

If you want to talk to us about using more of our top tax tips to help your business save real money then do the following:

  1. subscribe to our blog
  2. contact us via LinkedIn
  3. email us at paul@pjwaccounting.co.uk
  4. call us on 01889 586431
  5. read all our tax tips on Twitter and subscribe to our very tax tips stuffed TweetJukebox

If you like this set of tax tips then please do share it across Twitter, Tumblr, Facebook, LinkedIn and Google+ – where you will find us active on each social media platform!

Remember - Don’t Leave a TIP with the Taxman!

Share Button

19 Responses

  1. We are a group of volunteers and starting a new scheme in our community. Your website offered us with valuable info to work on. You have done a formidable process and our entire group shall be thankful to you.
  2. It's awesome to pay a quick visit this web site and reading the views of all colleagues on the topic of this paragraph, while I am also eager of getting familiarity.
  3. That is really interesting, You are an overly professional blogger. I've joined your rss feed and look forward to in search of extra of your great post. Also, I've shared your web site in my social networks
  4. Oh my goodness! Incredible article dude! Thank you, However I am having difficulties with your RSS. I don't know the reason why I can't subscribe to it. Is there anybody else having identical RSS issues? Anybody who knows the solution will you kindly respond? Thanx!!
  5. I was suggested this blog by my cousin. I am now not certain whether this publish is written via him as nobody else realize such particular approximately my trouble. You're incredible! Thank you!
  6. Hmm is anyone else encountering problems with the pictures on this blog loading? I'm trying to determine if its a problem on my end or if it's the blog. Any feed-back would be greatly appreciated.
  7. Wow that was odd. I just wrote an really long comment but after I clicked submit my comment didn't appear. Grrrr... well I'm not writing all that over again. Anyways, just wanted to say superb blog!
  8. Thanks , I have recently been searching for information approximately this subject for a while and yours is the best I've discovered so far. However, what about the conclusion? Are you positive concerning the source?
  9. Great info. Lucky me I recently found your website by chance (stumbleupon). I've saved as a favorite for later!
  10. Somebody essentially help to make seriously posts I'd state. That is the first time I frequented your web page and thus far? I amazed with the research you made to create this particular submit amazing. Magnificent process! asmr https://app.gumroad.com/asmr2021/p/best-asmr-online asmr
  11. This website really has all the information I needed about this subject and didn't know who to ask. quest bars http://tinyurl.com/49u8p8w7 quest bars
  12. Wonderful blog you have here but I was curious if you knew of any community forums that cover the same topics discussed in this article? I'd really like to be a part of online community where I can get advice from other experienced people that share the same interest. If you have any suggestions, please let me know. Thank you! scoliosis surgery https://coub.com/stories/962966-scoliosis-surgery scoliosis surgery
  13. Thanks in favor of sharing such a pleasant opinion, piece of writing is good, thats why i have read it fully scoliosis surgery https://0401mm.tumblr.com/ scoliosis surgery
  14. Hey I know this is off topic but I was wondering if you knew of any widgets I could add to my blog that automatically tweet my newest twitter updates. I've been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates. cheap flights http://1704milesapart.tumblr.com/ cheap flights
  15. If some one wants expert view about running a blog afterward i suggest him/her to visit this webpage, Keep up the fastidious job. ps4 https://tinyurl.com/45xtc52b ps4
  16. Hi, I do think this is a great website. I stumbledupon it ;) I am going to come back yet again since I bookmarked it. Money and freedom is the best way to change, may you be rich and continue to help other people. quest bars https://www.iherb.com/search?kw=quest%20bars quest bars
  17. With havin so much written content do you ever run into any issues of plagorism or copyright violation? My site has a lot of exclusive content I've either written myself or outsourced but it appears a lot of it is popping it up all over the web without my authorization. Do you know any techniques to help protect against content from being stolen? I'd certainly appreciate it. part time jobs hired in 30 minutes https://parttimejobshiredin30minutes.wildapricot.org/
  18. Hi there, I discovered your web site by the use of Google whilst searching for a similar topic, your web site came up, it seems great. I have bookmarked it in my google bookmarks. Hi there, just changed into alert to your blog thru Google, and located that it is really informative. I'm going to be careful for brussels. I will be grateful if you happen to proceed this in future. Many folks will probably be benefited from your writing. Cheers!
  19. Hello there! I know this is kinda off topic but I'd figured I'd ask. Would you be interested in exchanging links or maybe guest authoring a blog article or vice-versa? My site discusses a lot of the same topics as yours and I feel we could greatly benefit from each other. If you're interested feel free to shoot me an e-mail. I look forward to hearing from you! Terrific blog by the way!

Leave a comment