I got audited! Questions asked in a UK tax audit (part 1)
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- Опубліковано 27 тра 2024
- Few things in life are more stressful than a tax audit. In this video I'm going to openly tell you exactly what was involved in a compliance check from HMRC that I had several years ago. We'll look at the questions HMRC asked and in part 2 I'll share what I sent back to HMRC. I'll also tell you whether I came out of it unscathed - was I fined? Did I go to jail? Don't forget to hit subscribe!
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Not being funny but prosecution by HMRC could be enough to really turn someone trying to do things above board to just become a burden to the tax payer for the rest of their life. They really need to leave the little people alone and go after the big fish.
A compliance check is NOT a prosecution. It is an enquiry which does not result in a criminal record outcome
This is a great video, really informative. Wishing you well
It can't be good for your self esteem when they keep telling you that your income is so low! I'm a musician as well, so I'm in the same boat.
Thank you for the in depth look! Very helpful!
No worries! 👍
HMRC should stop chasing small fry and get hundreds of millions from Apple, Amazon, Google and Facebook.
Those are all US companies
They do. You just don't get to know about it. Inspectors rarely go after "small fry" for just the bleak reason that there isn't a lot of money in it for the treasury.
thank you very much for your valuable information.
I am sorry to hear your Accountant did not support at a time you needed them!!! A Good Accountant can provide very invaluable support being a buffer between the Tax Payer and the HMRC. Also a very experienced Accountant can reduce the stress of understanding technicaliities thrown by HMRC sometimes very unfairly. Good luck.
I was a self employed musician from 1990 until 2020 when CoVid knocked the touring on the head. Some years I worked in 9 or 10 different countries, paying tax at different rates or none at all, so assembling income / expenditure figures - coupled with outbreaks of disorganisation for example moving home - often sent me into a tailspin. I dreaded an investigation but never had one. Since then I have been in a local PAYE job a world away from music, and having regular Payslips while getting tax paid every month has been a godsend. And as my work is local my expenses eg fuel are minimal.
This is so helpful
I had no idea they would want half of this info. The biggest take away from this for me is to log mileage with a brief reason.
Yup - I think they went particularly in-depth on mine since it was such early days for the business, off-set losses etc. I don't think they'd drill quite that far for a relatively stable and established business... although a lot of it is down to how much resource they have at the time and what their compliance check targets are. 👍
My tax return say pending this year and I've been told I'm under security checks.. does this mean I'll probably be audited? I've not got any receipts for records..
So pleased you made this video Andy, made me realise there are a few areas in my accounting records I need to be more detailed such as the mileage log.
FWIW you mention getting flagged up for the interest, I also suspct that you were flagged because you are a music based business.
I know from talking to some musicians that HMRC specifically target musicians, not only is it a largely cash payment business which makes it more prone to avoidance but there is also lots of scope for earning from providing lessons and claiming lots of travel expenses.
Yeah, potentially. Although I know HMRC target different groups at different times. One period it will be plumbers, then musicians, then builders etc. Most musicians make very little money so it's often not worth the effort of pursuing them. 😀
@@SmallBusinessToolbox I can't go into too much detail but the HMRC audit that was done locally caught several musicians and the fines ran into the tens of thousands and caused divorces, homelessness and deaths.
As long as you're not evading tax you've nothing to fear.
This is really helpful, you're so reassuring! I was sent an email from my new accountant asking if I would like to pay best part of £100 'fee protection' (protection from soaring fees in order to deal with an audit) and I was wondering what your thoughts would be on this, is it worth it?
£100 is cheap snap your accountants arm off
This is why I would prefer to do my accounts myself, that way if there's anything wrong, you've only got yourself to blame!
It also helps that I like to keep every receipt I get, even if I don't need to keep it, something which I picked up from my grandfather. He has shoe boxes full of receipts and invoices dating back years so if HMRC needed anything he could just pick it out!
At the end of the day, HMRC are only interested in one thing, and that's getting money from you, as long as you do everything by the book, you won't get into any trouble. It's those people who do cash-in-hand jobs then spend that money on business things that get in trouble when they realise you're spending more than your making!
I religiously keep all of my receipts too. Quickbooks app lets me attach a photo of receipts and I keep the physical copy too.
Yup - exactly. Normally they'll back off if it's obvious the investigation is going to cost more than they'd ever make from you in additional tax. Sometimes it's just a warning shot (as I think was the case here). 👍
I have had absolute nightmares with HMRC , they use this special paper.
I have gone through the wars. It's not good. It's the time that you need to pray you got things ready. If you don't your ready to be screwed. My advice is use a legit accountant because as a new business Bieber like me it's super difficult bro know what's what's
Not quite for straight forward. I was a lowly PAYE employee who was audited for four years because HMRC got into their heads I was a company director with multiple incomes etc. They even had pre-payment estimates for money I didn't have using all my savings and borrowed money until it was refunded. Some years later I get another letter saying they couldn't find any Tax records for me which took another period of time to fix.
Oh great. I always do my own return but this year there were complications so though I best get help I paid an online company to appoint an accountant to do it for me as there wasn't really enough time to find one locally at this time of year. I noticed he didn't ask me how much interest I'd earned so I asked why & he said not to worry as you don't get taxed on interest over £500 in my bracket anyway. I still sent him my interest earned figures but I will have to check if he actually entered them for me, great when you've paid over a couple hundred quid for professional help 😐
I had an accountant who charged 26.00 per hour at the time. I say apparently, despite it being in the contract as they couldn't explain an item on their own bill where they had charged me £70 for apparently waiting on hold on the phone with HMRC for fifty minutes.
That is accountants' math for you.
Incidently they had called HMRC to confirm some taxation rule which I had told them applied to me which they didn't know even existed. Talk about a license to print money.
Needless to say I do my own books now.
Jesus those questions are terrifying
You should see a Tax Credits audit! 😀👍
cheers
Why the dire warnings? I had quite simple accounts, and had a tax audit done by an inspector. It was a doddle. The answer is to keep records. I sat in on 2 of my neighbours, one a buider one a landscaper. Both got rebates as they hadn't been claiming as much as they could.
Did the auditor come to your house or was this online / email exchange like in this video?
He did as I ran a small business. I later, after closing down, had a remote audit done by a tax inspector. Also a doddle. The answer is keep accounts. A friend of mine, a jobbing builder, also had a tax inspection. It can be stressful business, but he had a rebate after I went through his accounts. @@Xofttam
How much of your "home" use is a good one. Is there any guidance on this in Part 2?
Yup - will cover that in part 2 and might do a separate vid on it too. 👍
Pleased to see HMRC are doing their difficult job in detail.
No wonder everyone wants to live in a tax free country like Dubai. In this country you earn a buck and don't declare you will get gobbed at by society and called a thief because the daily mail will plaster your face all over the news.
👎
so dramatic