Red flags that will get an inspector's attention (and how not to wave them)
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This has turned many an inquiry drama into an investigation crisis. If you suspect your accounting systems are creaky, sort them out-before there's a problem.
If you suspect you're a bit of an anomaly in comparison to other businesses in your industry, get tax management software to test the key performance indicators in your return, before sending it in. Try and find a package with a risk assessment report, which works much as the tax authority's own risk assessment methods.
If you know your fortunes have changed, explain why, carefully on your returns. Otherwise the tax authorities might think you've changed the basis of your trading.
There’s no excuse for this. Get your returns in on time.
If you're in an industry where there is a minefield of technicalities or where changes in tax legislation makes mistakes more likely, get a compliance review from your tax advisor-prior to submitting your returns.
Frankly, there's not a whole lot you can do. If your number's up, it's up. But a compliance review might help.
This is a big no-no and is especially prevalent in new companies where the introduction of capital is netted off against drawings in the accounts. Inspectors are looking for lower than average, or a significant change in director's drawings. Make sure you keep the two separate.
This always looks suspicious. Better to state £1,230 rather than £1,200.
If she works for you, be sure you can prove she's earning market rates for her duties. Dividends in husband & wife businesses are also under close scrutiny so make sure you know the rules.
These include a whole host of sins, from failure to register for VAT, being just under the VAT limit, a frequent change of accountants, failure to enclose a full copy of your accounts and omission of information from banks and other sources. The answer is don't.
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