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Tax protection service - Should you invest?

We have just sent out our reminders for our Tax Protection Service, in case the tax man comes knocking with a tax enquiry.

Should you invest in the tax protection service?

It is a tricky one to answer. As if I say no don’t do it, as it seems remote that you are chosen, and then you get selected, you would rightly be very upset.

HMRC has let it be known that it aims to collect tax in 78% of its targets. HMRC are currently achieving 80%. So the other 20% must be specific enquires made by HMRC that yielded no tax, or they were purely random ones, to keep everyone on their toes. This implies that even if you are 100% sure you have disclosed all of your income correctly, and the expenses that you claimed are all justifiable, HMRC may select you for an enquiry.

So what can you do to help prevent this expensive and time consuming intrusion?

  • Well filing your tax return on time will certainly help. A late return draws attention to it and it extends the tax enquiry window i.e. the amount of time HMRC have in which to make a tax enquiry. Twelve months if filed on time. However, if the return is filed late, the enquiry window ends on the quarter date following the first anniversary on which the return was received. Quarter dates being 31 January, 30th April, 31 July and 31 October.
  • Ensure you pay on time. Again this draws attention.
  • Ensure you let HMRC know about any significant windfalls e.g. inheritance, lottery winnings, gifts or non-taxable income you may be receiving.  You can use the Additional Information box/White Space to detail this. If you get a visit from HMRC, their representative will pick up on anything with regards to lifestyle, not in keeping with income.
  • Ensure you are consistent in where you allocate expense on the return. Inconsistencies may cause the HMRC computer to select your return due to statistical variations.
  • Ignore bad advice! Such as those who encourage you to enter fictitious amounts. Or who say they have “got away” with putting through items that are clearly not tax deductible. Let them have the sleepless nights!
  • Make sure you review your figures before submitting. Does anything look odd to you? If so, ensure you investigate it, and use the Additional Information box/White Space to explain if necessary.

Of course as Accountants we will be employing the above checks on behalf of our clients prior to submission.

Let me know if you need any clarification on the above points. If you wish to take up our Tax Protection Service you can email us at: info@markcarr.co.uk or call us on: 020 7717 8474.