It is never a comfortable experience to find your tax affairs being scrutinized under the microscope and an investigation can be a worrying and expensive time depending on what the tax authorities decide after asking all of their probing questions.
In such a challenging situation it often pays to have some professional guidance in the form of tax attorneys fighting your corner and showing you how to contend with the situation in the best way possible.
Here are some key pointers to consider if you are being subjected to a tax investigation.
Maintain your composure
The announcement that your tax affairs are going to be investigated is likely to invoke a range of different emotions from anger to panic and plenty of other emotional reactions and thoughts besides.
It is no point pretending that a tax investigation is not going to be stressful at times but it often pays to keep calm and think clearly about how you respond.
Appointing someone who knows how these things work to act for you can often take a big weight off your shoulders and could improve the outcome if they know what to say and do on your behalf.
Get all your paperwork in order
As soon as you are notified of a tax investigation that should be the catalyst for getting all of your documentation in order so that you can provide the information requested as efficiently as possible.
Agree to realistic deadlines for supplying documents but ask for more time if you are struggling to get everything together as it is not a good idea to miss agreed deadlines.
Honesty is always the best policy
It is often far better to explain and hold your hands up if you have made an obvious error with your taxes rather than try to come with excuses that won’t be well received by the investigator.
You will be viewed as helpful if you cooperate and provide access to the records requested and that could help your case when it comes to concluding the investigation and calculating any penalties and extra liabilities.
Avoid making assumptions
Being put under the spotlight is bad enough but you don’t want to compound the situation by making assumptions that come back to bite you.
Even if you think you know why you have been selected for an investigation it would be wise to consider that their inquiries might be more far-reaching and you should be prepared for that eventuality.
Don’t go it alone
Being subjected to a tax audit is not a situation to tackle on your own unless you have previous accountancy and tax law experience.
The cost of employing someone to provide professional representation might turn out to be fairly insignificant if they subsequently manage to limit your liabilities and reach an agreeable settlement and closure within a reasonable period of time.
Having someone acting for you as a conduit between the two parties can often give you the chance to take a more focused overview of the situation and achieve greater clarity of thought, which is better than stressing out because you are trying to do it all yourself.