The two sides of the Inland Revenue

Article prepare by Richard Dare - Ward Goodman Small Business Specialist

The current economic climate has meant there are many tax payers who are not always able to pay their personal and/or corporate tax bills. So if you are in a position where you have submitted your tax return by the due date, to avoid the late filing penalty, but are left with a tax bill that you cannot pay straightaway then you should make contact with the Inland Revenue (HMRC) as soon as possible.

In our experience we have found HMRC are willing to help and will discuss with you the options you have under the "Time to Pay" deal. Be prepared for the conversation by having a payment plan than you know you can achieve and then stick to it.

You will need to call your local tax office or call HMRC on 0845 3661204.

http://www.hmrc.gov.uk/payinghmrc/problems/cantpay-individuals.htm

it is always better in these situations to communicate with the Inland Revenue than ignore the situation, that way you can not worry about demands for payment and concentrate on running your business.

But on the other hand whilst “helping” the tax payer by giving them time to pay the Revenue can also investigate whoever they wish - usually when they have reason to believe that tax is being lost. In 2009 the Revenue undertook 250,000 investigations reclaiming £220 million pounds of unpaid tax!!!

The classic scenarios that could lead to investigation are:

• Cash businesses
• Failure to comply with tax law, e.g. late submission of Returns, late payment of taxes.
• Insufficient income to meet outgoings.
• Third party information - yes someone else informing the Revenue
• Information from other tax gathering departments, e.g. the VAT office, PAYE Audit or Compliance visit.

You should be aware that the Inland Revenue passes information to the VAT office and thus you could also be involved in a VAT investigation as a direct result of any Inland Revenue enquiry.

In view of the Revenue’s powers and multiple sources of information at its disposal, dealing with an investigation can be a very time consuming and a costly affair.

So get your accountant to review your accounting records and take their advice on what you can and cannot claim, also there are insurance policies that you can take out which mean your accountants fees will be covered if an investigation is done on your affairs.

The message is simple – take your accountants advice, keep your records properly, be compliant and pay the right amount of tax.


To find out more about any of these stories or
Ward Goodman please contact 01202 875900