As a landlord, if there is a tax investigation the best defense is to have carefully kept business records. Making sure the accounts are in accordance with those records is a good starting point.
It may sound easy, however most of us can admit to being a little lazy sometimes when it comes to paperwork. It is imperative to keep experienced detailed records. If you have any doubt, it would be a good idea to speak to us and we will be able to advise you accordingly.
An inspector wants to demonstrate when running an investigation, that your records cannot be relied upon as a basis for the accounts. This is effectively ‘breaking the records’
Once this has been done, they can then justify putting their own estimates of what they think the profits should have been. This is why basic bookkeeping and keeping your receipts and invoices are so important to maintain an accurate record of your business for evidence.
A bookkeeping system should be in place for keeping track of your business. This will be where you can effectively record all income and expenditures. This then can be checked on a weekly or monthly basis to make sure the band entries match the ones you have. When this is in place and all business dealings are recorded this is when the tax man CAN NOT break your records!
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