Receiving a notice that you are getting an audit from the tax authority can wrack your nerves, whose nerves wouldn’t fray? but at the end of the day, an audit is nothing more than an in-depth fact-checking exercise.
Below are some few pointers that may invite the tax man to closely review your business affairs:
- A common pitfall is variance between sales declared under VAT and sales declared under income tax (particularly where you have under declared income against withheld income tax credits)
- Another simple pitfall is discrepancy on aggregate salaries and wages declared on the PAYE returns against the salaries and wages filed on the income statement of the annual tax file.
- Applications for cancellation of a tax PIN and company deregistration; is everything ok, are you trying to sweep something under the carpet?
- Nil Tax Returns filings year in year out; who on earth is paying your bills?
- Overdue tax obligation voluntarily filed but not settled; why are you failing to honour your promises? (sometimes this is a result of an accountant making an error while filing and the same goes unattended for long)
- Claims for tax refunds especially where your VAT account is always on credit and you are not dealing with exempt and zero-rated supplies.
- Prolonged loss-making periods, this may be ignored for specific industries where scouting, R&D and speculative costs are high at the onset for example in Mining. However, if your business is not in such an industry you will need to do some explaining.
- Tax informers. These could be disgruntled employees, or other business partners. It could also be as a result of media publicity. If you have loads of money to spend on your branding, maybe you also have some for taxes? Media Publicity can be followed by a tax investigation.
- Failure to submit annual self-assessment tax returns. You have an obligation to file tax returns on itax. If you haven’t, what is it you are trying to hide?
Filing your return completely, accurately and honestly helps in your compliance journey and reduces your chances of being pinpointed and the resultant disruption, but more importantly, even with a tax audit the odds of a favourable outcome are high.
At FHC, We help you get compliant. Talk to us today.
