For some time now, HMRC have been stepping up their compliance activities to close the tax gap.
In the wake of the pandemic the need to back-fill the huge hole in the UK’s finances meant that this intensified, and in the last Budget the Chancellor has promised more billions to go towards HMRC investigation, with the result that any potential avenue for HMRC investigation will be pursued.
Why would they call on me?
Sometimes an enquiry can be triggered by something that HMRC have seen on your returns or in your accounts, an innocent error that may leave your accounts, records and processes open to HMRC scrutiny.
Sometimes enquiries are the result of malicious third-party information.
In reality, though, HMRC don’t need a reason to open these enquiries and they may simply pick you at random for an enquiry.
What will they be looking at?
HMRC tend to focus on three main areas or heads of tax:
- Business income and expenditure
- VAT
- Employment and Benefits In Kind
If they find errors they can ask you to pay tax and National Insurance Contributions owing as well as interest and penalties and can go back up to 20 years with their investigations if they think the error was deliberate.
If they think the errors were deliberate and the amount owed is large enough, they may even consider publishing your name and how much you owe.
How can you prevent this?
Here at Thompson Wright, we do everything we can to limit the chances of HMRC enquiring into your business by making sure that the returns we make are correct, to the best of our knowledge and that any risk areas are known to you.
In addition, we offer an Employer Compliance Health Checks to all our clients who employ people.
This is a service where our team will go through your employment systems and processes with you and make sure that what you are doing complies with what HMRC want to see.
If something is wrong, we can put it right. If back-tax is owed then we can find ways to minimise the amounts before HMRC find them and make sure that the tax consequences are as minimal for you as possible.
What we can’t do is stop HMRC enquiring if they choose to do so.
So, what if you get an enquiry?
Of course, we’re always there for you if HMRC launch an enquiry. We will manage the enquiry from start to finish and can be there with you when HMRC call.
We have in our tax department a former HMRC Investigator who knows how enquiries work from start to finish and can make sure that we limit any damage.
If HMRC find additional tax, we can help to keep the costs down by negotiating with them and defending your position and when the time comes to pay we can agree payment plans to protect your cashflow.
The aim is to help you sleep peacefully at night, secure in the knowledge that an HMRC enquiry is not something you need to worry about, and you never know – we might find some tax-saving opportunities along the way!
So what to do next?
If you have any questions about HMRC enquiries or about your potential exposure to them, get in touch at any of our offices.
If you would like us to call and carry out an Employer Compliance Health Check for you, to give you peace of mind over your Employer responsibilities, please call.
And If you have heard from HMRC that they want to visit you then don’t delay and call us before you agree to a meeting with them.