PD Tax Tip: Covid-19 & Tax Compliance
In this ‘pause from normality’ it is important to keep your tax compliance guard up.
The period we are going through is not a ‘tax holiday.’
If the quality of your tax compliance drops, then the existence of Covid-19 will be no excuse for inaccuracies or negligence later down the line when faced with an HMRC enquiry, nor is it likely to be an excuse for late returns unless you become seriously ill.
The reality of this is exemplified by the fact that people are still receiving loan charge settlement letters (which require a response in 30 days) during this time.
- Understand the specific tax payment holidays and reliefs that exist through Covid-19 and apply them to the best of your ability.
- Prepare cash-flows to ensure your Time-to-Pay arrangements agreed with HMRC are realistic and give you and your business time to breathe.
- Speak with your accountant and tax advisor; tax will be collectable at some point, so tax planning goes on – especially as we come up to the end of the tax year.
- Use any spare time to ensure you know the status of your tax compliance and take steps to update where necessary.
- Ensure you continue to get all your tax returns in on time.
- Losses made now may be available for offset against past years’ profits. Consider the effects of this now whilst working out your overall tax liabilities and cash-flows.
When the threat has subsided and we return to life as normal, HMRC may well come out of hibernation strongly seeking to close the Government’s deficit