Advice from accountants and tax advisers to the self employed is to keep all records relating to tax matters up to date for at least six years. With the tax gap of £42 billion as well as huge cuts to be made in spending, HM Revenue & Customs will be looking to collect any tax which is owing from companies and the self employed to reduce this deficit. HMRC have been particularly vocal regarding their view on tax evasion and avoidance, which will prompt numerous investigations into finances.
HMRC can investigate records going back as far as six years and can also look at the current year, which makes it more important than ever that your records are kept up to date, with all records being retained for the requisite six years.
There are many areas which are commonly known to catch self employed people out. If you claim mileage expenses, you should be keeping all receipts for fuel, as well as essential car maintenance. Keep a business mileage log as proof of travel. For anyone using their home as business premises, energy bills including gas, electric and water should be retained if you claim for part of your home as business use.
Self employed people may find it easier and save time by employing the services of a small business accountancy who will prepare accounts for you. Outsourcing to cheap accountants will also keep you informed of changes to legislation and taxation which may affect you.
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