Have you a day job as well as a small business venture that has not been declared to the taxman?
Please be warned…. The taxman can investigate anyone, he successfully targeted small businesses and individuals in 2018/19 and therefore could be looking more closely at this group going forward.
A client, many years ago found himself in this predicament. Having various businesses over a 6-year period and holding down a full-time job, he hadn’t told the taxman of his ventures as believed he didn’t need to as had not made any money.
As he had not kept proper records, he just couldn’t prove it. Now being investigated, presented with a hefty tax bill, including penalties and interest for the full period, there was a mammoth task ahead with no books written up, just tons of paperwork in boxes with lots of missing information.
After requesting missing bank statements, writing up all the books and preparing the accounts, we found we could prove there were actually losses made in every tax year.
The next task was agreeing these with the taxman and that there was no tax due.
After various meetings, providing every piece of paper, payslip, and bill known to man, the accounts were agreed. But there was another plus here – his losses could be set off against his income and was actually owed a tax refund.
He was one of the lucky ones.
However, if proper records were kept from the inset, he could have claimed his tax refunds much earlier and not have had to use the majority of it to cover the investigation and accountancy fees.
Although this event happened many years ago, the same situation still arises today. It doesn’t have to be this way and can be easily rectified if you are proactive now rather than reactive later.
Accurate records need to be kept from day one. Today, this has been made easier with the use of cloud accounting software such as XERO and QuickBooks.
If you wish to avoid such a situation and just haven’t got to grips with this side of your business, then please get in touch.
Contact: Carla@cjmaccountingsolutions.com or call 07884 250981