Tax Investigation

It should be emphasized that, it is essential to maintain proper records in accordance with the Ministry of Taxation's regulations to ensure smooth operations and avoid any difficulties during audits. Below is a list of important items to be kept:

• Sales Day Book: Clearly document all transactions, including money transfers, card payments, and cash.

• Expense Invoices: Retain all expense invoices for record-keeping.

• Business Bank Account: Ensure your business has a dedicated bank account.

• Employee Timetable: Keep a timetable for employees.

• Employee Contracts: Maintain an employee contract board.

• Shop Insurance: Ensure proper insurance coverage for your business.

• Lease Agreement: The lease must be in the owner's name.

In this current time, many businesses face financial difficulties due to reduced revenue. However, there are cases where some individuals are requesting higher salaries for personal reasons, such as purchasing a home. It is strongly recommend that our clients review these requests carefully. If salary and expenses are high, there must be corresponding income to support these costs.

Although revenue may not be as high as before, it is crucial not to operate at a loss. When seeking advice from peers in the industry, it is important to consider that each business has unique needs and circumstances.

We are aware that some businesses allow customers to transfer payments to personal accounts or the accounts of family members. This practice can lead to confusion, as the amount of incoming money may not always be properly tracked. If these transactions are not carefully monitored, it may result in exceeding VAT thresholds. Submitting inaccurate financial statements could increase the risk of a tax investigation and potential fines. Therefore, it is recommended that regardless of VAT registration, clients should send their required documents to the accountant every three months for a review and advice to ensure compliance with your business's needs.

We have also advised against allowing customers to make payments to personal or third-party bank accounts, as this can lead to investigations of both the business and the individuals involved.

Finally, businesses aiming to avoid VAT should ensure their weekly income does not exceed £1,600, and that expenses—including salaries, rent, and supplies—remain below 80% of their income.

We hope this guidance will help you stay compliant and avoid unnecessary complications.