Most people have consciously moved a particular task into the “too difficult” category. It is worrying how many times a “too difficult” task results in some form of UK tax irregularity. Examples can ultimately include the lack of an up to date Tax Return for an individual, partnership, limited liability partnership or company. But that is not how it all starts.
Putting off the dreaded day
We are all busy people. We can all put off that dreaded task until tomorrow but then tomorrow never comes.
I am not talking about clients necessarily seeking to delay matters – they’re busy people too. I am talking about the task that nobody has ever grasped the nettle properly that has consequently got worse and worse as time has passed.
The people involved may be perfectly nice but the record keeping perhaps is the nightmare. Record keeping may be too generous for some such tasks! Jottings might be a more accurate description.
Why is it such a dreaded task – can you even remember?
How records are kept will still vary but in more recent times, the use of accounting software has provided a form of discipline to be followed. A lack of training may contribute to the problem but arguably at least there is a trail to follow what has been done, correctly or not.
Failure to keep proper books and records
My personal experience has been that some form of books and records have been kept – most likely they are incomplete. Incomplete in terms of the individual entries and incomplete in so much as there have been no checks and balances to ensure that the data is valid.
I have handled one matter where the “off book” business was vastly larger than the legitimate business and by a vast margin. Nevertheless, although that too started off by being “too difficult” simply got out of hand and a number of years had to be remedied and quickly.
Failure to prepare accounts
It follows that for a business, it is not always possible to create sets of accounts without all the underlying accounting records being in place. then there is the issue of rolling the figures forwards (or backwards) as necessary to the next day/week/month or year.
Failure to notify chargeability to tax
If the records aren’t there and the accounts aren’t there then there is little chance that the tax position is correct.
When HMRC come knocking on the door and find the underlying problem, tax fraud may leap to the fore. Quickly followed by “tax evasion“, Code of Practice 9, Contractual Disclosure Facility – the list goes on and on.
But is it tax fraud?
I have helped many clients who have simply been misunderstood. They were not fraudsters, they were business people trying to do their best. They also included professionals – often not knowing how to grasp the nettle and doing their best for a difficult or demanding client.