No matter what business you have, it is your responsibility to make sure that you are paying the appropriate amount of taxes you are required to by law. Complying with tax laws is of the utmost importance as failing to do so can result in severe consequences for you and the future of your business.
This article will break down what tax compliance means and what you can do to make sure that you are operating your business in line with government requirements.
What does tax compliance mean?
To put it simply, tax compliance is when an individual or business decides to comply with the established tax laws within a given country. Tax laws and regulations can change from country to country, which can make it challenging for business owners to have a full understanding of what is required of them.
If you are unsure if your business is complying with tax laws, you could consider working with personal and corporate tax lawyers who can offer advice and make sure you are ticking all of the boxes when it comes to paying your taxes.
Paying your taxes is a vital way to make sure you are contributing to the economy, and helping to fund public services such as education, transport and health care. To avoid paying your taxes can have a detrimental impact on some of the services that you and your business rely upon, which are often underfunded.
Implications of non-compliant behaviour
Non-compliant behaviour, or tax evasion, is a criminal offence. The punishment and average tax evasion sentences can vary depending on the seriousness of the crime committed. To protect yourself and your business, you must make sure that all relevant taxes are paid on time to ensure your licenses are valid and you can continue to operate.
If you do not abide by the required regulations in relation to tax, the impact on your business could be devastating. So, although it can be a difficult task to navigate, it is of the utmost importance that you make every effort to comply with the laws in place.
What type of tax do you need for your business?
There are several different taxes that businesses may have to pay in the UK, which are determined by a number of factors, but the most common types of taxes are:
- Corporation tax: All businesses operating in the UK are required to pay tax on all of the profits they make both domestically and overseas. This tax is calculated on the business’s income, often in line with the national average.
- Capital gains tax: Your business will be charged capital gains tax if it sells, exchanges or disposes of an asset and makes a profit as a result. The government will charge an amount of tax based on the gain that your business has made from the transaction.
- Value added tax: VAT is payable on services and goods at every level of the supply chain where any sort of value is made. Businesses that are VAT registered must ensure they are compliant with VAT regulations.