Will this trigger a tax investigation?

[itssotaxing]

Hi,

I have just submitted my tax return and my earnings are down quite a bit on last year's.

09/10 - £15000
10/11 - £20000
11/12 - £25000
12/13 - £16000

Is this likely to trigger a tax investigation alone? The reason for the drop was because I wanted to reduce the amount of hours I was working to spend more time with my children. I just want to have everything in order should this ring any alarm bells and I get the dreaded letter through the door. Thank you!

[wamstax]

A reduction in turnover could give rise to a risk of an enquiry however if the income is accurately recorded then clearly there should be little chance of HMRC proving that your due to pay further tax for the year.

However you have to remember that HMRC can raise any enquiries as long as it is reasonable. If you are sure that you have recorded all your income then no doubt you will be able to explain the reduction in turnover. The reduction in turnover may not create the risk on its own however if for example there had been no reduction in business expenses (or an increase) then that could be enough to trip the enquiry counter.

[itssotaxing]

Thanks so much for you reply. Yes I have everything accurately recorded although my expenses have gone up as I needed new equipment and my phone bills were also up too. Looks like I may get a check then.

[wamstax]

be prepared to show how you lived during the year if your income went down and expenses went up .