What is a Tax Audit?

HMRC has the power to conduct a tax audit on your personal or company tax returns to check the correct amount of tax is being paid and this can be expected every six years.  To perform a tax audit, a letter will be sent before an HMRC officer visits your work premises and request to see all the evidence you used to complete your tax returns.  They will then analyse this information to check all your accounts are correct, or not, and notify you of their findings.

How to avoid a tax audit

HMRC may want to conduct a tax audit on your business if:

  • Your tax returns are filed late, show errors or you pay your tax late
  • There is a substantial change in your tax returns such as a significant fall in income or increase in costs
  • Your costs do not match a business in your industry
  • Your tax returns do not reflect your business or your standard of living
  • You have offshore bank accounts
  • You have income from property that may not have been declared
  • You work in an industry that HMRC has decided to target or your business receives regular cash payments
  • HMRC receives a tip-off
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