The mere mention of an “audit” to any business 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.
- Don’t Panic – Read the Letter Carefully
Audits are more frequent than you think. Thoroughly review the HMRC (or another respective authority) letter to find out exactly what is being investigated; either it will refer directly to certain tax years, types of expenses or individual operations.
- 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.
- Review Your Accounts
Always verify before sending anything. Figures tally up with tax returns and include all relevant supporting documents. By correcting a legitimate mistake if you have caught one, when it comes to your attention rectify the error early on; this can actually work in your favour.
- 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, write the documents.
- Cooperate, But Know Your Rights
Share no more than the credentials asked for. Do not provide additional papers unless specifically requested. At any stage through the process you are allowed to reach out for advice from an accountant or tax professional. For advice from Gloucester Accountants, visit www.randall-payne.co.uk/services/accountancy/gloucester-accountants
- Attend the Audit (if required)
Certain audits can be done by mail, 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.
- Learn from the Experience
Review the results and feedback from the audit. Make use of this to improve your recordkeeping/ process 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 pro. By the end of it, if you take a good angle on tax planning around your business – you will have pulled through and feel more assured about how healthy or fit your business’ financial status is.