Dealing with tax affairs can be a nerve-racking experience. People worry about whether they have reported everything correctly or if they could have made a mistake that could get them into trouble or end up costing them money. Most mistakes are minor and are just that – mistakes that can be easily rectified; however, it is worth knowing what might trigger the tax authorities to take a closer look at your finances.
Those with high income pay more tax. The authorities are unlikely to waste their time investigating someone with a smaller tax bill, as any mistakes are likely to have a much smaller monetary value.
However small an amount of income you receive, you must declare it to the authorities; if you don’t, they will catch up with you and charge tax and interest on the income in addition to fining you for non-disclosure. If you are not sure how to declare your income, you could find accountants Swindon to help.
Typos and errors with figures
Mistakes can happen, so it is always a good idea to get your returns double-checked.
Missing forms or deadlines
As a business owner or an individual, there are different types of tax that you may not be aware apply to you; therefore, you might not complete the relevant returns and miss the deadlines. This can be costly in arrears, interest and fines, so it might be an idea to employ accountants Swindon to handle these for you.
High proportion of charitable giving
Donations to charity are a great way to reduce your tax bill; however, if you are claiming that you are donating the majority of your turnover to charity, the tax authorities are likely to question this and an audit will be triggered. This doesn’t mean that you can’t donate the majority of your earnings – you just need to make sure you have documentation for all your donations to show that they are legitimate and satisfy the audit.
Being a business owner
Business owners have more tax-saving options available to them than individuals. As there is such a fine line between tax avoidance, which is legal, and tax evasion, which is illegal, the authorities may question some of a business owner’s expenses to establish whether they are genuinely business-related or of a personal nature.