Shropshire companies warned over corporation tax clampdown
With HMRC stepping up the number of random tax investigations it carries out, a local tax specialist is offering business owners across Shropshire some valuable advice to ensure they aren’t caught out.
In an attempt to become more ‘business like’ and deliver greater financial returns for the Treasury, the Revenue has launched an unprecedented crackdown on corporation tax avoidance, which has seen more than 15,000 random inspections undertaken in the last two years.
“Being subjected to a tax investigation is obviously a very stressful situation for a business owner to find themselves in, and one they most probably wouldn’t have faced before,” Fiona Green, Taxation Director of Shrewsbury-based DJH Accountants, explained.
“A lot of people naturally think the taxman is ‘always right’, and subsequently when approached by HMRC are likely to do what is asked without hesitation. However, this instinctive trust in the taxman is something business owners should be wary of, and before responding to any investigation demand they should seek professional advice, as trying to deal with the investigation themselves can often have a negative impact on their business.
“Tax inspectors are highly-experienced specialists, and without proper representation, a business may end up divulging more information than they actually should, simply because they aren’t aware of some of the jargon and terminology involved.”
Fiona also warns businesses not to talk too freely and give up more information than is actually necessary. “Classic examples of this are when inspectors ask to look at private bank statements at the start of a review, information which shouldn’t be handed over until HMRC can prove that the business’s records contain errors, and when they ask for statements, invoices, and other documents going back over a number of years – in many cases, it’s actually out of time to investigate these details,” she explained.
“In many tax investigations, there isn’t always a ‘right’ answer, a lot is open to interpretation and negotiation, and the review can often last for years, which is why using an experienced and qualified accountant or tax specialist can help minimise the disruption caused to a business and ensure it doesn’t end up paying a larger tax bill than is necessary,” Fiona concluded.
