Protection against an enquiry

The most common area for small businesses that is investigated by the tax man is that of expenses which may have an element of personal benefit as well as business use. For example, travel costs, meals, entertainment, telephone.

The better your record keeping in these areas the less in depth the investigation is likely to get.

However, if the records are too ‘good’ this could cause problems, e.g. if you have documented claims for business expenses 52 weeks per year the tax man may find it hard to believe you never have a holiday or business mileage records that don’t tally with your car’s service history.