“No matter how large or small you are, HMRC can launch a tax investigation at any time. There doesn’t have to have a specific reason – everyone who submits a tax return is at risk.”
Tax investigations remain as prevalent as ever, and this is set to continue if HMRC are to hit their target of closing the £7 billion tax gap.
Every tax enquiry is different but there are certain processes to go through. We have set out below the general pattern that is followed during a tax enquiry.
Normally, an enquiry is initiated for a reason. Although HMRC will open a number of purely random enquiries each year, this only accounts for a small percentage of cases. So, it’s more than likely that HMRC are looking at you or your business because they have reason to believe that there could be discrepancies between the tax declared and the actual tax due.
The first indication of the enquiry is when a letter arrives from HMRC advising you that they have decided to open an enquiry. They may ask to see only a limited portion of your records, or just seek clarification on certain points if there are only one or two specific issues they want to look at. However, in the case of a full enquiry, they will want to see all business records.
Ideally, this is the point at which you should contact us to seek our specialist help.
We can look at the way you run your business and review your business records (in conjunction with your accountant if you have one) to try and identify any areas that may have given HMRC cause for concern.
There may have been some genuine oversight or error which has created a discrepancy. If this is identified at an early stage and disclosed to HMRC, it may well be possible to reach an early settlement with the minimum of penalties and interest.
Once HMRC have carried out their enquiries and review of your records, they will advise you of any areas of concern, and if they think that there have been discrepancies, they will suggest an amount of additional liability to be paid by you. It is often the case that HMRC’s attempts to quantify underpaid liability are based on quite crude and basic assumptions and estimations.
We play a vital role in defending your position and establishing evidences from your past sales trends and ratios to justify the amounts in the event of absence of your supporting documents. We will defend you and aim to resolve the matter within the shortest possible timeframe.
