Tax, Accounts and Common Myths

Ask any accountant and they will give you an honest answer.  There are so many myths surrounding tax that it is no wonder so many people file their tax returns incorrectly.  But you should be warned; incorrect tax returns could lead to a COP9.

Here are a few tax myths uncovered.

You can avoid paying tax

This is highly incorrect.  No one can avoid paying tax.  The other myth is that if you set up a limited company then you can avoid paying tax altogether.  Well, if that were true then everyone would do it.  Find out what you need to supply the HMRC and when.  Don’t get caught out.

You have to be good at maths

In order to do your accounts you don’t actually have to be good at maths.  You can use one of the many software packages out there that helps you run your accounts for you.  You can also use a qualified accountant to do your taxes.

HMRC are always correct

Well, this isn’t strictly true as it is sometimes the case that they have to send you back a cheque for overpaid taxes.  But it is best to not go barging in and asking them to refund your money, you might want to double check.  But yes, you can query them as everyone can make mistakes.

You can hide money

No, in a word.  You can’t hide money as the HMRC will find it.  They are very clever and have a number of ways of investigating to see that everyone has paid what they owe.  They are currently running a campaign to claim back all unpaid tax that has been avoided or evaded.

Overall it is best to not dupe the HMRC.  It is their job to ensure that everyone pays their taxes, and the right amount at that.

The best thing you can do is to employ an accountant who is able to give you as much help and guidance.  In life there is no accounting for expertise.  If you car was broken you would call an expert, if your health is suffering you would speak to an expert.  The same goes for your business and your taxes.

Failing to file your tax return properly, and to pay the right amount of tax, can result in a penalty, an investigation and even a prison sentence.  Consider the harm this could do to your business if you were to be investigated by the HMRC.  In October 2010 the campaign  clamped down on all of the taxes that have not been paid.  Investigations are underway and with each financial year more and more businesses are being assessed.

The best way to ensure you are not under scrutiny is to follow the rules.  It may sound obvious but you would be surprised by the amount of people who don’t and are then surprised when they are under investigation. 

Make sure you keep records of all your in-goings and outgoings and contact a chartered account to advise you.  They can even fill in your tax return on your behalf to help ensure that you do it properly.  Don’t make it harder on yourself.

About the Author: Harry Price is a free-lance writer, entrepreneur and a travel man. He enjoys spending his time with his dogs and learning new cultures. 

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