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Louise Hudson
Louise Hudson

01245 420 821

Chartered Accountants & Business Advisors

HMRC have announced they will be focusing on the following areas of enquiry:

  • Overdrawn director and shareholder loan accounts – HMRC will be checking that overdrawn loan accounts are physically paid back after the year end and that dividends have been appropriately declared with the correct documentation completed to support dividends declared.
  • Travel expenses - HMRC will now be checking that clients are maintaining detailed mileage log’s including date of travel, reason for travel, miles completed and evidence to prove that this was genuine business travel. HMRC will want this mileage log to be completed on a day to day basis and not at year end.
  • Reimbursement of expenses for employees - As above with traveling expenses, they will need to provide a detailed mileage log. Note that commuting to work is not deemed as business travel. With training costs, if the training is regarded as continuing the development of an employee it should meet the criteria to be tax deductible, however, training to learn a new skill is not.
  • Employment status – HMRC will be trying to disprove people who are self-employed, so treating them as an employee, resulting in significant underpaid taxes. They are also focused on companies falling fail of the IR35 legislation.
  • Private use allowances – If you are self-employed and have a car running through your business, private use should be disallowed as a tax deduction. The same will apply to use of home as office. Justification of the deduction should be well documented, unless you are only claiming the £4 per week allowance, which has been agreed by HMRC as allowable.

The above are only a selection of the current target areas and anyone could be investigated at random.

If you have any concerns with your accounting or taxation affairs please do not hesitate to contact us using the website ‘contact us’ tab or by telephone on 01245 420 821.

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