Any business, including individual personal trainers, could become the subject of a tax investigation if they are selected by HM Revenue & Customs’ Risk Intelligence Assessment Teams (RIATs).
As might be expected, the RIATs are secretive about the way they operate and are even protected from providing details by the Freedom of Information Act. However, John Shaw, partner at Bentley's Chartered Accountants in Bolton says that there are warning signs that could be possible triggers of an investigation. Tax issues that are likely to arouse their interest include:
- more than one recent set of overdue accounts or tax returns
- significantly fluctuating income or expenses
- expenses that are obviously incorrect
- no adjustments for the private use element of expenses
- low income compared with likely outgoings.
Says John, “Some simple steps can help to reduce your risk of attracting the RIATs’ attention. Staying up to date with your tax returns is a wise move, even if you have to submit a form using estimated figures. Make sure that you tick the “estimated figures” box on the declaration page and submit the correct figure as soon as you can.”
Many businesses take out insurance so that in the case of an investigation they are able to meet the cost of the additional professional fees. These schemes can cost as little as £40 per year for a personal tax return or £110 for a sole trader. John says that this may prove a wise precaution as investigations can often cost thousands of pounds in professional fees, interest and penalties on unpaid tax.
For further information please contact John Shaw on 01204 388675.
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