in fear of investigation

[ernie1965]

Hi all I am a small retailer with a small unit in a shopping centre and I sell on ebay and amazon. My turnover would be about 60-70k a year. I do my best to be as honest as possible with my tax return and if there is ever a doubt I make sure that I err on the side of caution. The problem I have is that I am very dissorganised. I am worried that I may a tax instection at some point. I know there is always a chance however does anyone know roughly what percent of small business are investigated by the tax man and do you have to be "unlucky" for it to be you.

Thanks in advance
Ernie

[section 44]

Is there such a thing as luck?

[mullet]

HMRC's coverage of small businesses is very low (single figure percentage) but they use risking tools. So if you trade in a risky sector (i.e. lots of cash and very little paper) then you would be more likely to be investigated. Chances are you won't be, but you should always be alert to the possibility.

I think luck exists in the form of bad luck, i.e. HMRC's random enquiries!

[johnowirr]

I agree with Mullett.
Returns are reviewed on the basis of the amount of tax at risk based on known factors in each sector. My advice to you is to ensure your record keeping is as good as you can get, if necessary with professional help because you label yourtself as disorganised. If you are unlucky enough to find yourself before HMRC( some cases are selected at random and not by risk but very few) good records will help significantly.

[robbob]

Hello ernie

The main problem with trying to work out taxes yourself is that it can be easy to make the same repeated genuine mistake over several years, this can turn what may be a small issue into a larger issue.
What may only be a 5-10% in any one year of being investigated becomes a much higher chance if you know you will be around in ten years and there are 10 chances of getting the anti "winning lottery ticket"

If in any doubts get a good local accountant to check your books calculations and core records once every 3 years or so after you have done the calcs and before submission, this won't cost alot and should give some good piece of mind.

Some points to remember

(a) Get you Gross sales figures right - this is before deduction of fees etc.
(b) Be very careful with any motoring expenses calculations
(c) always adjust for private use as appropriate
(d) keep all source records - ideally on paper printed form (or online storage from reputable big firm)
(e) Ensure that cash never turns up out of nowhere and it can be shown exactly how and when all expenses are paid - with appropriate documentation to prove this
(f) Keep good records/documentation for all non business related income - even if the money is banked into a personal account or simply used to pay a personal credit card.
(g) Don't worry too much - as long as you are honest and trying to keep good records and take reasonable care - particularly if you are erring on the side of caution with your claims - as mentioned above though a sporadic independent check is a worthwhile excercise if you have any lingering doubts.