Business Tips #2: "Reducing the risk of a tax Investigation"

The Risk of Enquiry

Screening: The majority of tax enquiries are NOT generated at random; Returns are screened to identify those likely for further "work" by HMRC.

The taxman cannot answer his own queries Re: Your Tax Return. Problem: he cannot request information from you under Self Assessment (S/A) without a formal enquiry.

Result: Enquiry opened even though answers received show it wasn't necessary.

Reduce The Risk

Tip 1: Compare 2006/07 with previous years return. Satisfy yourself that you can explain any variances in the figures. If these are substantial, then write an explanation in the "Additional Information" box at the rear of the return.

Tip 2: If the variations are due to a change in circumstances, cessation or commencement of a source of income, then provide full details and calculations to explain entries on return.

Tip 3: Send any additional information with your return. This will reduce the chances of an enquiry being opened.

File Online?

Since November 1st, 2006, it has been possible to submit an attachment along with your Self-Assessment returns.

Safety Tip:-It may be better for you to have your Tax Returns completed by your accountant, a trained Professional who will help reduce the risk merely by using his/her expertise and advice.

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