AUSTRAC is Australia’s specialist financial intelligence that is charged with the responsibility of investigating and prosecuting serious money criminal activity, including tax evasions. The information from AUSTRAC is what the Australian taxation office uses to identify tax avoidance. In 2013-2014, information from AUSTRAC contributed to 20931 ATO Cases of 358.3 million dollars in tax assessments raised. Tax investigations pose a big problem to business owners, especially those that are startups as the investigations are usually quite costly, and it is the individual businesses that will be required to cater for all the expenses. What’s worse is it doesn’t matter that you have paid your taxes correctly as you cannot stop the investigations from taking place. Therefore, it’s necessary that every business owner is aware of tax investigations and the risks that are involved as well and also to put measures into place like getting tax investigation insurance cover to minimize the risk.
How to protect your business
The first efficient way of protecting your business is ensuring that your record keeping is complete as well as accurate. Not only is it a legal responsibility, but it is also important in ensuring that you are declaring and paying the right amount of tax. There is an array of software for recordkeeping most of which are affordable and quite easy to use that you can get to help you keep track of your accounts. Additionally, you should have a good understanding of your tax responsibilities for a tax investigation does not forgive those that are ignorant. In case you are in any doubt, it would be at your best interest if you spoke with a qualified accountant or tax advisor.
How insurance is beneficial
Another great way that you can be able to protect your business is taking a tax investigation insurance cover that covers against the potential costs that result from tax investigations. They can be able to cover costs such as those for investigations into VAT, PAYE, and self-assessment among others. Also in the event that you decide to appeal against HMRC, then your fees will be covered. A good insurance cover also is one that will be able to provide additional cover on access to a legal and tax advisor help if you are in need of one. An important point to note before buying a policy though is that tax protections do not cover underpaid taxes, penalties, fines or any interest that may accrue. They are only there to help you deal with the costs that result from investigations.
Business owners in the different sectors of the economy need to be always prepared for tax investigations that are normally without warning. This way in case of any costs, then your business will not be pulled to its knees. Two ways that have proven effective as discussed are proper recordkeeping and then buying a tax investigation insurance cover for your business that will take care of all the costs that may be incurred in the process of the investigations.