If you want to understand the taxation challenges facing limited companies and sole traders in the modern age, you need only look at the fine issued by HMRC for late payment at the beginning of 2019.
Incredibly, it was revealed that HMRC had wrongly sanctioned 653 people for late payment, with the notice of the fine received more than a month before the actual deadline. Although this issue was subsequently noticed and corrected, it had persisted for two years in total and highlights the often confusing nature of complying with domestic tax laws.
Make no mistake; complying with international tax rules can be even more challenging, and in this instance you may need to consult a reputable advisor. Here are the advantages of this:
Keep Abreast with the Latest Tax Changes
From Parliamentary changes to the ever evolving tax legislature in the UK, it can be hard to keep up-to-date with your precise liabilities as a business owner.
This is particularly true when you consider the daily challenges associated with operating a commercial venture, with both changeable and technical tax laws a particular cause for concern.
By working with an international tax advisory, however, you can employ a team to keep you abreast of these changes and provide crucial planning and strategic support.
Secure Advice in the Application of Agreements (to Avoid Double Taxation)
In general terms, multinational firms may be liable to pay income tax on both their UK income and the revenues generated overseas, depending on the regulatory approach of the country in question.
However, this does not apply in instances where the UK has a ‘double taxation’ agreement with the country in which you operate, and the government is constantly negotiating such arrangements as part of international trade pacts.
The UK entered into discussions with Peru in July, for example, to strike a double taxation agreement that will reduce the cost of doing business between these two nations. International advisory firms like RSM can update you on the changing landscape and the rules in each individual country, enabling you to plan your finances accordingly.
Even in instances where a country continues to prescribe double taxation, a specialist can provide detailed advice on the application of agreements and how to legally minimise your cost base.
Benefit from Analysis and Auditing
Another key issue associated with international business is the imbalance in transfer pricing studies, whilst fluctuating currency rates can also impact on the amount of tax payable per annum.
An international advisory can provide analysis and detailed diagnosis of any problems in transfer pricing studies, whether this is a standalone service or part of a wider tax audit.
You can also ask your advisory to perform a comprehensive audit at any time, as you look to identify potential pitfalls or reporting issues that could result in a financial sanction.
This is far more effective than an internal audit, which may create a scenario where stakeholders are loath to admit or accept responsibility for a previous error.