HM Revenue & Customs (HMRC) is actively pursuing cash businesses to ensure that they properly account for VAT.
Business owners often encounter overzealous HMRC officers, who try to extrapolate findings for certain days of trade over many years to estimate a liability.
This extrapolation gives rise to large assessments, which are then followed by large penalties and additional tax assessments for income tax or corporation tax.
These assessments are based on the officers’ so-called best judgement and unless these assessments are properly challenged they can result in financial ruin for the trader.
Salhan Accountants’ VAT investigation team consist of a Chartered Mathematician, Chartered Accountant and Chartered Tax advisor, this multi-disciplinary team delivers some quite exceptional results time and time again.
In a recent case where Salhan Accountants represented its client, HMRC made a statement saying: “Reviewing the card sales to cash sales as declared by you, the average percentage for cash declared was 13%, whereas we found that the cash percentage is more likely to be 30.7%.
“It would seem that cash sales are regularly understated by 18% resulting in an under declaration of tax.”
The basis of calculation and its extrapolation was carefully tested and vigorously challenged by Dr Salhan during the investigation, resulting in HMRC accepting their calculations were wrong and withdrawing their assessments – saving the business thousands.
If you are facing any similar issues or have been contacted by HMRC regarding the possibility of an investigation, please do not hesitate to contact us.
