As accountants and agents, we act for small businesses in their dealings with HM Revenue and Customs (HMRC). Some businesses have a better relationship with HMRC than others. We often take on clients who are having problems with HMRC, and try to straighten them out. Is there a secret formula for avoiding the unwanted attention of HMRC? No, most of it is common sense.
The following are 5 of the most common ways of keeping under the radar.
- File on time. There are deadlines for filing tax returns, VAT returns, payroll returns, etc.., and if you file on time, you won’t receive reminders.
- Pay on time. Following on from (1), if you’ve filed on time, you should also pay on time. Not always easy, but this highlights the importance of preparing for your tax bills. One way to make sure you are prepared is to get your affairs dealt with sooner rather than later. For instance, if you have received a 2015 personal tax return, it would have been issued in April 2015 and the tax should be due by 31 January 2016. If you’ve got it finished in May 2015, you have 8 months to get the cash together. If, however, you leave it until December 2015, you have much less time. And don’t forget the effect that Payments on Account can have.
- Be realistic. If you make profit, you have to pay tax, subject to the rules. You can bury your head in the sand, but it won’t go away. If you’ve made a lot of profit in the 2015 tax year, the tax will be due by 31 January 2016 whether you like it or not.
- Don’t change your mind. In other words, try to avoid submitting figures, then having to resubmit amended figures. There isn’t any evidence that this will be detrimental, but if you say to HMRC “here are my figures”, then say a month or so later “actually, I forgot about this”, then you could potentially be flagging yourself up as someone who isn’t really in control of their finances.
- Don’t start a fight. Tax needs to be paid, however much you don’t like it. If HMRC write asking for more information, or decide that a last minute request for more flexible payment terms isn’t acceptable, it probably won’t get you anywhere by being aggressive or confrontational. If anything, it may make them look more closely at your affairs. Again, there isn’t any evidence of this, but why start a fight?
In short, keep your head down. HMRC have too many businesses making waves and too little staff to bother you if you do everything you should.