HMRC are cracking down on tax avoidance. At the moment, their image is a somewhat merciless one when it comes to dealing with issues of undeclared income or problems with compliance. Some smaller business owners, if they realise they have made a mistake or come across some other problem, have a tendency to panic and wonder whether HMRC will be inclined to deal unsympathetically with their case. However, the vast majority of tax problems can be sorted out quite neatly and easily in three steps.
Talk to Your Accountant
The first step is to talk to your accountant. If they lack any of the information that will be needed to assess and address your problem, make sure you provide it. Explain your concerns and exactly what problem you have encountered or fear you could be facing. They will be able to help you look over your business’ financial situation in detail, work out whether everything has been correctly recorded and reported to them and, consequently, to HMRC, and advise you on the implications of the situation. Most importantly, your accountant will be able to tell you exactly what should best be done to resolve the situation, and help you with getting things sorted as quickly and as smoothly as possible.
Get Things in Order
Correct any mistakes in your records, and with the help of your accountant work out exactly where you stand. For instance, work out whether you have underpaid or overpaid on tax, whether you have failed to report something which you should have reported, and where your finances will stand once the situation has been corrected. This will help you to make sure you get things sorted out in full and in detail as quickly and neatly as possible, and are not left with further fallout from the problem once it has been resolved.
Talk to HMRC
This is the part that many business owners dread, but I is a necessary step and not normally even something to be feared. Even if your mistake amounts to accidental tax evasion – even if you fear HMRC may believe you have been deliberately avoiding tax – it is definitely best to get in touch with them before they believe something is up and investigate. If people who have been avoiding tax accidentally or even deliberately get in touch with HMRC voluntarily in order to resolve the situation, they tend to appreciate the effort and honesty involved, and as a result they will usually be willing to work with you to get things resolved rather than trying to pin as much blame and as many penalties on you as possible. Some tax problems and mistakes are less serious than business owners tend to fear, and can be resolved quickly and easily by your accountant without the need to talk to HRMC directly and confess your mistakes.