Tax can seem like one of the most complicated bits of your business and tax due diligence is no different. It’s the process of gathering information about your company’s tax affairs to make sure it’s compliant with current tax laws. It’s also a critical part of any business’s risk management assessment and helps spot and reduce any potential tax risks.
Preparation is always the key when preparing for a company’s tax due diligence. There are some steps you can take to make it more straightforward, such as:
- Understand the tax laws. The first step is to understand the relevant company tax laws in the UK. This includes the different types of taxes that businesses are subject to and the rules and regulations governing these taxes.
- Gather all relevant documentation. Make sure you gather all documentation relating to your company’s tax affairs, including tax returns, invoices, contracts and bank statements.
- Identify any potential risks. Once you have all the relevant documentation together, take the time to identify any potential risks in your tax affairs, for example, errors on tax returns, unreported income or improper deductions.
- Take steps to mitigate any risks. Once you’ve spotted any potential risks, do something to stop them. This may involve amending tax returns, paying back unreported income or correcting improper deductions.
- Have a plan in place. It’s important to have a plan in place in case there’s an audit. Your plan should include who’s responsible for responding to the audit, what documentation you’ll need to provide and how you’ll address any findings.
By following these steps, you can prepare your business for the tax due diligence process in the UK and make sure you’re compliant with the tax laws. If you’re uncomfortable with the tax due diligence process, always seek professional help. We’re here to make the complicated clearer and the overwhelming accessible when it comes to tax, so get in touch with our team today.
