Business owners dread the idea of HMRC to conduct a tax audit. Luckily, the HMRC compliance standards are not as challenging as you think. In fact, with a little bit of preparation, professional assistance, and a touch of luck can ensure smooth operational activities for your business without the fear of a tax audit.

Naturally, you don’t want to complicate things with IR35 and trigger an audit from HMRC. Besides, you want to ensure the management of your resources in the most sophisticated manner possible.

Though there’s always a chance of audit looming over your business, you can implement numerous cautious strategies to protect your business from a tax investigation:

Analyze Your Tax Returns

As much as hiring a professional tax accountant matters, it wouldn’t give your business immunity from a possible tax audit. Your business, after all, is solely responsible for all the tax forms your accountant submits on your behalf. Therefore, check your tax return repeatedly before your accountant finalizes submission.

Don’t Hesitate or Wait for Explanations

It is vital to take into account that HMRC utilizes software to pinpoint flaws in your profit and expense accounts. You can, of course, explain certain anomalies in your tax return to HMRC to thwart suspicions and prevent a possible tax investigation.

Make Sure to Submit Correct RTI

One of the most effective ways to avoid a tax audit is to make sure your RTI (real-time) submissions align with payroll providers to decrease your chances of a tax investigation. Concurrently, make sure you answer all of the concerns regarding tax return to HMRC without bias or prejudice. The idea is to give the impression that you’ve got nothing to hide from the taxman.

Ensure the Authenticity of Your Expenses and Other Business Costs

You should be aware of the fact that HMRC analyzes taxpayers’ profiles based on their current and previous financial performance. In fact, HMRC uses different kinds of ratios based on your tax returns. Thus, don’t try to deviate or manipulate your expenses or other business costs that might put you in a position of explanation.

Tip-Offs: Don’t Disclose Information

Business owners tend to discuss internal business matters to external parties that might lead to tip-offs. It could be from your partner, ex-spouse, or business associate. And that’s precisely why you should be careful about disclosing internal affairs of your business to third-parties that may disclose the Information.

Keep an Eye on HMRC’s Compliance Policies

Sure, there’s no specificity about the criteria with which HMRC evaluates the financial position of businesses. It could be just the behavior of a business owner that might result in a tax audit. So long as you monitor the current compliance policies and regulations of HMRC, you can minimize the chances of audit from the taxman.

Hire an Experienced Accountant

Businesses shouldn’t forget the fact that HMRC has an extensive database directory of your tax records. It means they can put two and two together and recognize any inconsistencies in your business.

An accountant, for instance, will make sure that you submit tax returns without mistakes and on time. And little to no chance of errors means there’ll be no one at HMRC to raise tax suspicions. In hindsight, an accountant can handle your financial books more professionally and reduce the risk of tax audit altogether.

We can help with all of your business and personal tax and financial planning needs. For a strategic review of your finances, please contact us.

Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our financial advisor if you need more information. This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.


✨Shaking up the accounting profession ✨Business coach ✨Book Author ✨ Multi business-owning mom & wife.

I love to make business fun & have a passion for teaching my clients how to build a life they love while making an income they deserve!

Madeleine Salariu