Ever heard the phrase “beware the fury of a patient man”? Well after helping a couple of new clients who had fallen foul of HMRC in the past and wanted a clean sheet, I now understand what it means.
No news isn’t always good news and there are a minority of businesses owners who fail to get their tax work done and think it’s okay as they don’t receive a penalty or notice of imminent bailiff action, this inevitably encourages them to do it again and again.
As an accountant I’ve had a lot of experience dealing with HMRC and it is my opinion that the following is true of their behaviour:
They simply don’t have the man power to chase down every tax offender and they often focus on the most prolific or the easiest targets for a quick win.
- From their letters it’s not always obvious what they want and if someone has learning difficulties or dyslexia they will often struggle to understand it, demands for tax often lack details and can be difficult for a business owner to establish how accurate they are.
Our revenue services can be incredibly difficult to deal with and unless you phone at 8am in the morning you can expect a half hour wait on the phone or up to 2 months to have your letter read and responded to providing it doesn’t go “missing” in the post.
People should never underestimate how far HMRC can go back in terms of collecting debts and penalties, I have recently helped someone who had outstanding penalties dating back to 2007. While there are limits to how far back an investigation can look these don’t apply if no returns were submitted in the first place and HMRC made automatic judgements in terms of tax due.
HMRC have an incentive to keep quiet about missed deadlines as the penalties rack up and they can be extortionate, especially as many are automatic and have very little relevance to the amount of tax actually owed.
With all this in mind it’s more important now than ever for entrepreneurs to take a proactive approach to managing their tax affairs, or better still employ the right accountant to do it.
The traditional back and forth approach no longer works and a good tax advisor needs to be an integral part of a business so that they can advise their clients on what they can see that they need, rather than what they say that they need.
If you are based in or around Northampton and would like some advice on managing your business finances and improving your tax situation then please get in touch and we can help you with whatever you need.