Tax Compliance - Why Is It Important?

Tax Compliance

This can be defined as the degree to which a company or individual acts in accordance with the tax laws and regulations in their country. This includes the payment if the correct amount of tax, giving out information on your revenue or income to the tax authorities as well as ensuring you do all these within the set timelines. Therefore a late submission or payment amounts to non-compliance. Non-compliance attracts a penalty over and above the interest that is charged for late submissions or penalties. This is an extra expense for the business or for yourself and it can be avoided altogether by ensuring that you stick to the rules. Why is tax important and why would you need the services of accountants in birmingham?

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Importance of tax

Taxes form one of the revenue streams for the government- in some cases, it is the greatest revenue stream. This money is then distributed to different state departments and used to support their operations. The taxes are also used to maintain the shared resources such as roads and transport networks, electricity and its distribution networks, water purification and distribution, the fire fighters, police and army. Health and education are some of the biggest beneficiaries from taxation and without taxation, public schools and health facilities would suffer immensely.

The government also uses this tax for investment purposes. This not only pumps money into the economy, enhancing economic advancement, but it also pumps money into local and profitable businesses which ultimately improves the standards of living in the state. Social programs incorporated by the government such as those that take care of the vulnerable in the community also benefit from money earned through taxation.

Why outsource advice on tax?

There are different types of taxes in each state payable both by individuals and corporations. Although businesses and individuals have access to information on these taxes, not everyone has the ability to understand their computation and payment. As such, it is good to work with a reputable accountancy firm that has skilled and experienced personnel to do the work. In addition, there are different laws that govern taxation. As a business or individual, your aim is to minimise the tax liability in a legal way. This process is referred to as tax planning. An accountancy firm will assist you in planning your taxes, in order or minimise the tax liability and maximise on net revenue.

While employed individuals usually get their tax deducted by their employers, those who do not have employment income are required to calculate the taxes they ought to pay and pay them within the stipulated periods. Those without a finance background may not have the knowledge and skills to correctly compute their taxes. Therefore, they require assistance from experienced accountancy firms such as those in Birmingham.

Tax disputes

In some instances, there may be tax disputes that may arise from an overcharge, undercharge or in some cases, the tax liability of another person may have been wrongfully transferred to you. Resolving these disputes amicably requires careful analysis and understanding of the situation. This can be achieved through the advice of a qualified and experienced tax expert.