With more than £5.3 billion in tax going missing every year, it’s no wonder HM Revenue & Customs (HMRC) is ramping up its enforcement activity.
In fact, more than 3,800 cases of suspected UK tax irregularities or avoidance were heard in 2017/18 alone. So, if HMRC comes knocking at your door, would you know what to do?
Tax fraud is a serious criminal offence that can lead to criminal prosecution, although most cases are resolved through civil procedures by the Fraud Investigation Service. A recent self assessment tax return with inconsistencies is a common trigger for HMRC investigations. Maintaining accurate tax records and business records is crucial to manage your tax affairs and tax liability effectively.
If HMRC sends an inspection or information notice, it is important to respond promptly and seek professional advice from a tax investigation specialist or legal adviser. The financial consequences of an HMRC tax investigation can be severe, including the requirement to pay unpaid tax within 30 days, along with potential interest, additional penalties, and severe penalties for deliberate behaviour. Filing self assessment tax returns and VAT returns accurately and on time is essential to avoid triggering HMRC compliance checks.
HMRC tax investigations involve various types and procedures, such as a full enquiry, aspect enquiry focusing on a particular aspect of your accounts, or random checks. These investigations cover a wide range of tax matters beyond just Income Tax, including corporation tax, PAYE, and VAT returns. During a full enquiry, limited companies and their trading style are thoroughly reviewed, with HMRC scrutinising tax calculations and records in detail.
Unusual activity in tax records or accounts, such as discrepancies in expense receipts or late filing of returns, can trigger a tax investigation. Skilled tax experts and tax investigation services play a crucial role in dealing with HMRC, helping to control the whole process, manage the flow of information, and minimise costs and stress. Resolving tax disputes in a timely manner is important to reduce disruptions in an individual’s or business’s life.
HMRC has extensive powers during investigations, including the ability to visit your accountant’s office or business premises, request information, and conduct criminal investigations in the most serious cases involving criminal offences. The time limit for investigations varies depending on the nature of the enquiry, with HMRC able to look back up to 20 years in cases of deliberate tax evasion.
The outcome of a tax investigation can range from no further action to the payment of additional tax, interest, and penalties, or even prosecution in the most serious cases. If you disagree with an HMRC decision, you may request an internal review or appeal to the tax tribunal. Having extensive experience and professional support from tax investigation experts is vital to achieve the best possible outcome.
In summary, HMRC investigations are complex and potentially stressful, but with the right professional advice and careful handling of requests for information, you can navigate the process effectively and protect your tax affairs.
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Why Am I Being Investigated?
If you’ve landed on this page, you’ve probably just received a notice of investigation through your letterbox. Don’t panic. In the majority of situations, you’ve either
A)Â been selected at random for an investigation
B)Â made an error on your tax return.
An aspect enquiry refers to an investigation by HMRC into a particular aspect of a taxpayer’s accounts, often triggered by inconsistencies found in a recent tax return.
HMRC uses sophisticated data mining tools to identify unusual activity and trends in tax records, which can also trigger investigations.
However, you may have also been made a target of an investigation if you or your business is suspected of tax avoidance. Errors on your tax return can result from an innocent mistake, carelessness, or intentional wrongdoing. A tax enquiry is a formal process that HMRC uses to investigate these issues. HMRC tax investigations can be stressful, but understanding the process and being prepared can help manage the situation effectively.
In any scenario, it’s essential to follow due process to avoid hefty fines and punishments. HMRC enquiries require businesses to provide detailed information and clarity regarding their financial affairs. Investigations can also be triggered by unpaid tax, so it’s crucial to ensure all taxes are properly disclosed and paid. Random checks can occur unexpectedly and are not necessarily indicative of any wrongdoing.
During a full enquiry, HMRC reviews comprehensive business records when there is a significant risk of tax error or deliberate tax evasion.
Step 1: Get In Touch
Obviously, contact the experts as soon as possible for tax investigation services as a solution. Our tax advisors play a crucial role in managing investigations, helping you navigate complex tax disputes and achieve favorable outcomes. Specialist tax investigation services are essential in simplifying the resolution of tax disputes with HMRC, minimising stress and complexity for clients.
We are experienced in handling investigations from beginning to end, including making representations on your behalf. Professionals are vital in dealing with HMRC, ensuring a more manageable experience for those facing tax-related inquiries. It goes without saying: the quicker you contact us, the sooner your investigation will be over.
Step 2: Make Your Own Assessment
If HMRC suspects you or your business of tax avoidance, it’s important to make your own assessment, including filing a self assessment tax return. Filing tax returns accurately and on time is crucial to avoid increased scrutiny from HMRC. Timely submission of an assessment tax return is crucial to avoid increased scrutiny from HMRC. Maintaining accurate financial records is essential to manage your tax liability effectively.
This is why help and advice during an investigation is so important: the testimony of an expert, such as a reputable accountant at Thompson Wright, will give legs to your case.
Step 3: Make Corrections (If Any)
If, after you have reviewed your tax position, you find an error, you must be transparent and prompt in reporting it to avoid penalties. Intentional mistakes can lead to severe penalties and significant stress. The financial consequences of penalties can be substantial, impacting your overall financial health.
Honest mistakes will not be punished as severely as those you have attempted to conceal, but submitting incorrect figures is a common issue that can still raise red flags. It is crucial to minimise potential penalties through professional guidance and negotiation with HMRC during the investigation process.
Step 4: Make Yourself Available
HMRC investigators may want to visit your premises in person to review your documents, files, and personal affairs. Accurate and comprehensive business records are crucial during such visits, as they help assess potential tax errors or evasion. Maintaining up-to-date business finances is essential not only for compliance with HMRC requirements but also for gaining insights into the financial status of your business, such as identifying overdue payments and preparing for audits.
Additionally, the accountant’s office may be visited by HMRC to audit accounts and gather information related to the investigation. You will want to make yourself, your key team members and your records easily accessible to help move the case on quickly and efficiently.
Step 5: Make Representations
If you feel that the outcome of an investigation has been unfair or you are involved in a tax dispute, you can make representations before a tax tribunal to have your case reviewed. Tax experts play a crucial role in this process, providing the specialised knowledge needed to navigate HMRC dealings and resolve investigations. A dedicated tax investigations team can offer expert guidance and support, helping you manage the complexities and stress of dealing with HMRC.
Our specialists can appear before the Tribunal on your behalf. It is important to understand HMRC’s decision to initiate an investigation and your obligations as a taxpayer, including the right to question their decision and the consequences of non-cooperation.
Step 6: Making Payments
