Mainly, businesses hire tax consultants or advisors to deal with tax compliance, prepare tax returns, and ensure they pay the right amount of taxes to HMRC.
This comprehensive guide will help you with hiring a tax auditor London.
Table of contents
● Why hire a tax auditor for my business?
● Do I need a full-time or freelance tax auditor?
● How to hire a tax auditor in London?
● What can the HMRC check?
● Can tax auditors help in ignoring HMRC tax investigations?
● Wrapping up
Why hire a tax auditor for my business?
You need to hire a tax auditor for numerous reasons, especially when unsure if you are paying the correct taxes.
There are three types of tax audits conducted by HMRC,
● A full inquiry is performed on all business accounts when HMRC suspects deliberate tax evasion.
● Aspect inquiry conducted on particular areas where HMRC suspects inconsistencies or honest mistakes.
● Random check is performed anytime, regardless of your account state or whether you have triggered an HMRC check.
However, your tax auditor can examine the tax return, business accounts, and compliance checks before submitting your tax return to HMRC and make unforeseen mistakes to trigger an investigation. It eliminates the chances of misstatement and fraud, leading to costly penalties. These professionals warn you about any deliberate tax evasion.
What does a tax auditor do?
Here are a few responsibilities of an internal tax auditor.
● Check the numbers on your tax return
● Calculate the right tax amount while requesting the legal tax refunds
● Go through business accounts to find any unseen mistakes or misstatements
● Pay taxes before the deadlines
● Checks your PAYE records and returns
● Ensure financial statements are fair and true and comply with regulations
● Offer insights into ways your company can legally reduce tax liabilities
However, an external tax auditor appointed by HMRC has different roles and responsibilities as set by the government or depending on their suspects.
Hiring a tax auditor is beneficial as they understand your business and have a track record of avoiding costly penalties during an investigation. They collect evidence to prove you follow industry standards, do correct tax return filings, and meet tax compliance.
However, an external tax auditor is preferred over internal auditors as they provide unbiased reports and feedback trusted by investors, shareholders, and regulators.
Do I need a full-time or freelance tax auditor?
If you are running a small to mid-sized business in London, look for freelance tax auditors near me. They appear in business during a particular period of the year and charge you per hour or a fixed amount against their services. Hiring them saves you money, time, and other resources. You can outsource tax auditing duties to audit firms working with experienced professionals for better service at an affordable cost.
However, an established company with numerous shareholders and investors may need an auditor throughout the year. You need to hire them from a talent pool and pay a fixed salary and employee benefits over it. These professionals can be costly, but they can save you from expensive mistakes.
How to hire a tax auditor in London?
At times, an internal auditor and tax consultant can be the same person when they have chartered status with tax specialisations and have experience in audit.
You need time to find the right individual for your audits such that no unprofessionalism invites HMRC audits. Here are a few tips on hiring a tax auditor in London:
● Look into the qualification of an auditor; if they acquired a “chartered” or “certified” title from a professional accounting body like CTA, ICAEW, or ACCA, they are best suited for your company.
● For Audit firms, choose one with at least one experienced registered auditor working in your sector.
● Ask for references from business associates, list down a few names, go through their websites, find clients’ reviews and feedback, and set a face-to-face meeting with the selected candidates.
● Ask if they have prior experience with your industry and can find immediate and personalised solutions for any tax-related issues.
● Ask about their availability, like if they will be available only once a year or anytime you need them, and their method of communication.
● Finally, discuss their fee and payment methods to ensure you are not compromising quality over affordability.
What can the HMRC check?
HMRC audits are triggered due to several reasons:
● Filing tax returns with errors
● The difference in profit margins between years has dramatically shrunken
● A mismatch between industry salary standards and actual pay
● Failure to pay the correct tax
● Omission of income sources
If you trigger a tax investigation, HMRC can check the following:
If you use an accountant for tax audits, inform HMRC, and they will contact them directly instead of you.
Can tax auditors help in ignoring HMRC tax investigations?
No, tax auditors cannot ignore a tax investigation notice from HMRC; instead, they can restrict the arousal of such situations. Having a professional beside you during an investigation can reduce your penalties or help quickly finish the investigation process.
You can only avoid an investigation with a reasonable excuse, like you’re seriously ill, and you need to inform the same with sufficient proof to HMRC. You can write to the office to stop HMRC checks, giving a reason why you want them to stop the audit. Additionally, ask your auditor to understand if HMRC’s decision is correct; otherwise, apply for alternative dispute resolution.
Having a professional behind you is always advisable for businesses of any size and type. If you are on a tight budget and hiring a tax auditor is a luxury, you can always outsource to individuals or audit firms for expert advice at an affordable quotation. Additionally, HMRC pays a part of the auditor fees if mentioned accurately on your tax return.