ACCA Taxation F6 Practice Exam 2026 – Complete Study Resource

When an employer fails to maintain accurate tax records, the primary consequence is the potential for fines and penalties. This is because tax authorities require businesses to keep detailed and accurate documentation to support the figures reported in tax returns, including income, deductions, and credits. Inaccurate or missing records can lead to audits, which may result in additional assessments of tax owed, along with interest and monetary penalties for non-compliance.

The importance of accurate record-keeping cannot be overstated; it protects the business from disputes with tax authorities and supports transparency in financial reporting. If records are not maintained properly, not only might employers face fines or penalties for underreporting income or overclaiming deductions, but they could also be subject to more significant scrutiny from tax authorities in the future.

Other outcomes, such as a reduction of tax obligations or the ability to estimate tax liabilities, are not accurate in this context because inadequate records hinder compliance and can lead to greater liabilities rather than reductions. Additionally, the assumption that there would be no consequences is incorrect, as tax authorities have strict regulations surrounding record-keeping and non-compliance typically results in negative repercussions for the employer.