The Secret Entrepreneur: The tax man’s gonna get you!

Nothing to hide or not, tax inspectors may doorstep you when you least expect it. Was our mystery CEO ready?

The longer you’re in business, the more likely it is that you’ll get a ‘surprise’ visit from the tax man.

I’m not talking about a pre-arranged inspection, or a call to enquire about some details. I’m talking about being doorstepped by a couple of serious looking gentlemen carrying large briefcases and flashing government issued ID.

Like going through customs, even when you know you’ve done nothing wrong, it’s still a spare-underpants-required moment. Especially as I had 30 minutes until I was due to leave the office to get a filling.

The tax man and the dentist on the same day. How fortunate.

It should be noted that if it isn’t a pre-arranged appointment (it wasn’t) and they don’t have a warrant (they didn’t – I hadn’t committed a crime) then HMRC don’t actually have a legal right of access to your business premises. You can tell them to do one and come back when they’ve arranged an appointment for a convenient time.

This didn’t seem like such a great idea. I had the feeling that getting these gentlemen’s backs up would be the last thing I wanted to do. So, after checking their IDs carefully and explaining I was short on time, I showed them in.

It turned out they were VAT inspectors, who ‘happened to be in the area’. We’d come up on their radar as our turnover had grown a lot, and they didn’t understand what it was that we did, so they thought they’d use the opportunity to find out and to check we were keeping our records correctly.

After 20 minutes of trying to explain our technology and business model to them, it became clear these guys weren’t exactly familiar with high tech businesses. This was confirmed when they decided the simplest thing was for them to take a print-out of our homepage with them for their files!

To my great fortune, and fighting against my inner hatred of organising paperwork (what a waste of time!), I’d spent much of the previous week getting our filing in order. One cupboard of our office contained stacks of perfectly labelled, neatly arranged files of every invoice we’d ever sent and received. Two weeks before they had been scattered all over the place.

When they asked to see our records I simply turned and pointed at the files. There were a lot of them. I braced myself. If they wanted to do an audit this was going to take a long time.

To my amazement, they took one look at the rows of files, flicked through one of the many folders, grunted in acceptance and then gave up. They thanked me for my time, said they had seen all they needed to and promptly left. I have never been so grateful for a filing system.

That was five years ago. I haven’t heard a thing from them since. The filling I got that afternoon is still in place too. I’m now obsessive about our team keeping our paperwork in order!

Read previous Secret Entrepreneur columns here on Startups.co.uk.

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