Navigating the UK tax system can be challenging, especially for Vietnamese business owners unfamiliar with local regulations. Many businesses unintentionally make costly tax mistakes, leading to penalties, audits, and financial risks. To help you stay compliant and avoid unnecessary fines, here are four common tax mistakes and how to prevent them.

Ignoring HMRC Investigations or Penalty Notices

If you receive a warning letter or a penalty notice from HMRC (HM Revenue & Customs), ignoring it can result in more severe consequences. Non-compliance can lead to increased fines and more in-depth tax investigations, putting your business at risk.

How to Avoid This Mistake:

• – Always open and respond to HMRC correspondence promptly.


• – If you’re unsure how to respond, seek guidance from a tax advisor or accountant.


• – Maintain accurate financial records to provide necessary documentation if required.

Late Tax Return Submission

HMRC is strict about tax return deadlines. Whether you’re filing a Self Assessment or Corporation Tax return, late submissions can result in immediate fines—even if you owe no tax.

Example: A sole trader who misses the 31st January deadline for Self Assessment will automatically receive a £100 fine, which increases daily until the tax return is filed.

How to Avoid This Mistake:

• – Mark tax deadlines on your calendar or use digital reminders.


• – Work with an accountant to ensure timely submissions.


• – File your tax return well in advance to avoid last-minute stress.

Not Registering for VAT on Time

If your annual turnover reaches £90,000, you are legally required to register for VAT. Failing to do so can result in penalties and having to pay VAT retroactively from the date you should have registered.

How to Avoid This Mistake:

• – Regularly monitor your business turnover to track VAT eligibility.


• – If your turnover is approaching £85,000, consult with an accountant about VAT registration.


• – Keep clear financial records to calculate your revenue accurately.

Not Understanding Tax Deductions

Many business owners either overpay tax by not claiming allowable expenses or risk penalties by claiming ineligible expenses. Understanding which costs are tax-deductible is crucial to optimizing your tax payments.

Example: A nail salon owner who incorrectly claims personal travel expenses as business costs may face penalties for misreporting.

How to Avoid This Mistake:

• – Keep detailed records of business expenses.


• – Only claim expenses that are directly related to your business.


• – Consult a tax advisor to legally minimize your tax liability.

Take Action Now!

Staying compliant with UK tax regulations is essential for your business’s success. Review your accounting records, set up a tax management plan, and seek professional guidance to avoid costly mistakes.