Questions when under tax investigation
As we predicted earlier this year, the tax authorities have begun their investigations as of 2024.
In recent weeks, they've conducted surprise visits to a number of nail salons and restaurants, interviewing salon owners and employees to better understand how these businesses operate.
The primary goal is to identify potential loopholes, as the UK government is currently facing significant debt and is seeking ways to recoup funds.
To help you prepare, we’ve compiled some of the questions that have been asked during these recent inspections:
Business Details: What is your company number and tax number?
Owner Information: Who is the owner? What is their national insurance number and personal address?
Additional Income: Does the owner have any other sources of income, such as bank interest, dividends, or untaxed income?
VAT Status: Is the business registered for VAT? If not, why?
Customer Information: How many customers do you typically serve at the same time? How do you handle situations when multiple customers arrive simultaneously?
Employee Information: How many employees are typically working at once? Do any of them work without proper documentation?
Employee Records: What records do you keep for your employees? What is the work schedule for each employee?
Wages: Are employees paid hourly or fixed salaries? How much do they earn per hour?
Contracts and Overtime: Can you provide employee contracts? How do you handle overtime, and are employees paid extra for it?
Furlough Claims: Have you claimed furlough money? If so, can you provide evidence for employees unable to work due to Covid-19?
Grants and Financial Support: Have you applied for any grants or support from the council? If yes, can you provide proof of the amounts received and used?
Business Loans and Debts: Does the owner owe any money to the business? Has it been repaid? If not, has the S455 tax been settled?
Salary and Attendance Records: Do you maintain salary records, employee IDs, and daily attendance logs? Can you provide details of how employees are interviewed and hired?
Paye and Pension: Please provide your PAYE reference number. Do you provide retirement benefits for your employees, and if so, can you provide the reference number for the pension scheme?
Employee Compliance: During the visit, are any employees not working or failing to file a tax return?
Employee Timetable: Can you show the employee timetable and how the weekly work schedule is communicated to employees?
Uniforms and Equipment: Does the business provide uniforms for employees?
Income and Record Keeping: Do you keep a daily income record? If not, do you use a cash register? Where are customer personal details stored? Are daily income records kept at the shop or taken home each night?
Financial Oversight: Who is responsible for summarizing the daily income, checking the correct amounts, and verifying the records? How often are these checks done?
CCTV and Security: Does the salon have a CCTV system? If so, how often is the footage backed up?
Accountant and Lease Details: Can you provide the name and address of your accountant? Who is renting the shop, and can you provide a copy of the lease agreement? If the salon is subleased, who is subletting, and for how long has this been the case?
Employee Rest Areas: Is there a designated space for employees to rest outside of working hours?
These questions highlight the range of areas the tax authorities are reviewing, and it’s essential for businesses to have thorough and accurate records to avoid potential issues. Being prepared and transparent with your financial documentation can help mitigate the risk of investigations and ensure your business stays compliant.