UK Tax Investigations
It is an unfortunate fact of life that you may find yourself or business under enquiry by HM Revenue and Customs (HMRC), through no fault of your own or your accountant. HMRC enquiries can be random of for various reasons. HMRC normally don’t have to give a reason as to why they are enquiring into your tax affairs.
HMRC can make enquiries into many taxation areas including:
The whole process can often be very worrying and confusing for the taxpayer. Often, even if HMRC do not find any errors amongst your books and/or records you may find yourself paying high professional costs to defend your position. There are differing types of enquiry including aspect enquiries, where only part of a self assessment tax return is looked at, to full enquiries where your whole tax return is reviewed.
The process should begin with a formal letter from HMRC stating that they are making an enquiry. This is normally accompanied with, or shortly followed with a request for information. Having reviewed this information it is normal that the investigating HMRC officer will have a long list of questions. This can further lead to discussions about potential tax adjustments and penalties. If there are any errors or adjustments to be made these a normally dealt with under civil law. If fraud or tax evasion is suspected it is possible, under extreme circumstances, that criminal proceedings can occur.
It is highly recommended that you have an accountant who is experienced in HMRC procedures and tax law to represent you if you find yourself under enquiry by HMRC. A good accountant will be able to advice you of your legal position, the likely outcome and deal with most matters on your behalf.
Whilst no one can guarantee that you wouldn’t be subject to a HMRC enquiry, some accountants offer peace of mind to their clients by providing a fee protection service.
The service works on the basis that you pay a modest annual subscription, in the event of a HMRC enquiry the accountant then makes a claim on their firms fee protection insurance policy, which is normally underwritten by a national insurance company. As such all of their fees may be met by the insurance company.
Nobody can prevent you from being investigated by the Taxman, but a good accountant can help to ensure that you get the best possible support and advice without having to worry about the cost. Please note that you should check with the accountant what the actual terms and conditions are that relate to the services that they offer.
The author does not guarantee the accuracy of any information provided in this article and recommends that you do not take any action, whatsoever, based on the information provided. By the fullest extent permitted by law, the author does not accept any responsibility for any actions you may or may not take based on information contained in this article. This article contains general information and is not a substitute for specific independent professional advice.
