What to Do If You Get Audited

The mere mention of an “audit” makes even the steeliest entrepreneur break out in a cold sweat, but with proper preparation it really doesn’t have to be that bad. Follow this easy guide to know what you should do when an audit notice lands on your desk and make the process as painless (and confident) as possible.

1. Don’t Panic: Read the Letter Carefully

Audits are more frequent than you think. Thoroughly review the letter from HMRC (or the relevant authority) to find out exactly what is being investigated; it will usually refer directly to certain tax years, types of expenses or individual transactions.

2. Gather Your Records

Begin gathering the requested documents. This could include bank statements, invoices, receipts, contracts or agreements but also payroll records and possibly previous tax returns. It also helps to organise them by subject and date to make reviewing easier.

3. Review Your Accounts

Always verify before sending anything. Check that figures tally with your tax returns and include all relevant supporting documents. If you catch a genuine mistake, correct it early; this can actually work in your favour.

4. Communicate Promptly and Professionally

Reply to the notification of audit on time. If you need more time, reach out to the auditor’s office and ask for an extension. All communication should be professional, so use polite language and, if you can, put things in writing.

5. Cooperate, But Know Your Rights

Share only what has been asked for. Do not provide additional papers unless specifically requested. At any stage through the process you are allowed to seek advice from an accountant or tax professional. For advice from Gloucester Accountants, visit www.randall-payne.co.uk/services/accountancy/gloucester-accountants

6. Attend the Audit (if required)

Certain audits can be done by post, some in person. Prepare your documents, conduct yourself well and be truthful in answering questions, whether it is a face to face interview or virtual.

7. Learn from the Experience

Review the results and feedback from the audit. Use them to improve your record keeping and processes if you need to.

Final Thought

While audits are necessary, they can be extremely stressful, so the more prepared and transparent you can be, the better. If you do your own bookkeeping all year, don’t be afraid to hire a professional. By the end of it, you will have pulled through and feel more assured about the health of your business’s finances.