Businesses have been subjected to a new form of action from the tax authority. From tax amnesties to spot checks, the HM Revenue and Customs has come up with new tactics to make sure that businesses are paying taxes as they should. However, this poses a big issue with entrepreneurs who don’t know how to protect their business against the taxman investigation. This is where taking insurance against tax investigation becomes paramount. Investigation by HM revenue can be costly, even if you pay your tax properly.
What is the tax authority doing?
The tax authority has started a number of crackdowns on various professions, so as to recover revenue lost through tax evasion. The HM Revenue and Customs has noted areas in which it can recover revenue easily. The tax authority has employed the tax amnesties technique which requires taxpayers to declare their income.
For instance, the “Plumber Tax Safe Plan” requires plumbers to declare their income and also take lenient fines. Those who didn’t respond to the amnesty were warned that they would have to pay high penalties, if they are found making false declarations.
However, it is not only plumbers who are facing the “new wave of action”, businesses in every discipline need to know the risks of a tax investigation, and they need to understand ways to reduce that risk.
How can you protect your business?
The first way to protect your business is to have a complete and accurate record keeping. Record keeping is very important, if you are to declare and pay the correct amount of tax. You can buy bookkeeping software to help you manage and keep track of your financial accounts. Also, ensure that you fully understand tax responsibilities, and remember running away from the law is not a good defense. Talk to your tax advisor or a certified accountant if you are in doubt.
Taking an insurance against tax investigation can help your business
Many entrepreneurs choose to take insurance against tax investigation in order to cover against costs that arise from tax investigation. Taking an insurance against tax investigation can help you cover the costs of defending the actions of HMRC. Some of the costs that insurance firms cover are VAT, investigations into PAYE and self assessment. If you choose to appeal against the HMRC, the insurance can cover costs associated with the local court system.
A great tax protection should also give you access to a tax and legal advice helpline to help you whenever you need it. Also, this kind of insurance depends on you being a good taxpayer. For you to qualify for the cover, you must fill out and submit returns in time. Note that tax protection doesn’t cover underpaid tax, fines, penalties or interest, but only to help you handle the cost of investigation. Lastly, legal cover is also part of the business insurance policy.
If you want to take insurance against tax investigation, the best company to contact is Accountancy Insurance.