Dealing with tax investigators can be very stressful and can lead to an emotional roller-coaster ride. In the first few minutes of realization – after opening the letter from the taxman – denial and terror are common reactions, followed by bitterness and regret. Because of this, it’s paramount to take a comprehensive tax investigation insurance which will cover for the costs that you incur during investigation. While you’re looking for a good insurer, here are tips to help you survive a tax investigation.
Handling tax can be very complicated, so you need to stay calm and look for a financial adviser such as a tax investigation insurance expert. You need someone on your side, someone who has vast experience in handling tax investigation issues and someone who knows everything about the taxman.
Do not destroy your evidence
Hiding or removing all your documents may lead the taxman to assume something fishy is going on. If you have not been keeping records, ensure that you get replacements such as your bank statements and work with your adviser to come up with estimates to fill any gaps.
If you don’t understand certain questions, seek clarification from the tax inspector. According to law, tax inspectors are supposed to work amicably with the clients so as to resolve a dispute.
Do note over promise or under deliver
If you can’t meet deadlines, contact the revenue and explain your circumstance and agree on another timescale. Remember, if you continue to miss your deadlines, you are increasing penalties and this may lead to demands for more information. Similarly, if you wish to pay your debt in installments over a stipulated period of time, inform the taxman and be truthful about when you can. Avoiding payments can lead to serious consequences.
Never assume. For instance, that the tax investigator doesn’t know about your offshore bank accounts. The revenue authority has vast amount of information in custody, and can still get more details from third parties all over the world. Therefore, if the investigation agency is scrutinizing your financial reports, then it is for a reason. If your returns have errors, don’t assume that is the only thing that the revenue authority is interested in; the revenue authority would want to know if the same error occurred in the previous years.
If you suspect that there is something wrong with your tax return don’t hesitate. Talk to the taxman upfront. It is vital to disclose all the relevant information regarding your tax return. If you fail to disclose all the facts, this will not only lead to more penalties, but you may even face charges if a criminal investigation is launched.
To avoid issues with the tax authority, why don’t you take tax investigation insurance? With tax investigation insurance, all the costs that come with tax investigation will be catered for, by your insurer. To buy a policy, talk to experts from Accountancy Insurance – this company is known for offering affordable covers to clients. Visit their website for more information.