Tax Enquiries and Investigations in Nottingham
What are Tax Enquiries?
A tax enquiry is a process by which HMRC check in detail that the information on a tax return is correct and complete. They do this by asking questions about your return, through meetings and a review of your records. HM Revenue and Customs have the right to open an enquiry into any return.
Why is HMRC Contacting Me for a Tax Enquiry?
HMRC use enquiries to make sure that you are paying the right amount of tax. You should normally try to answer the questions they ask and provide the information they ask for. HMRC should only ask for information or documents that are reasonably required to allow them to check your tax position.
What Happens During an HMRC Tax Enquiry?
Once HMRC has decided to conduct a tax investigation, you will be obligated to provide the information they require. Having said that, you can argue against the decision to investigate if you believe HMRC’s reasoning to be incorrect. The rest is in the hands of HMRC, they will look into exactly what caused the anomaly – more often than not is due to nothing more than a minor discrepancy and the case is quickly closed.
Occasionally though, some cases will need a more detailed investigation and HMRC may request further information.
What are the consequences?
Well, realistically very few investigations for small business owners result in imprisonment however, up to 100% of the tax due can be issued as a penalty in addition to the tax payment. In addition, HMRC do not have to “prove” only “suspect” that actions in one year may have happened in previous years. For example, missing income of £1,000 in one tax year can be “assumed” to have happened for the previous 5 years and the tax and penalties and interest applied thereon. If innocent mistakes are made some leeway may be given for any penalties but it is often at the discretion of the inspector in charge.
What are Tax Investigations?
A Tax Investigation is an official inquiry into your tax payment history. A Tax Investigation in the UK is conducted by HM Revenue and Customs (HMRC) with the severity of an investigation being completely dependent on the case. There can be many reasons for tax investigations and inquiries, for example;
- Following a tax return;
- As a result of a mistake or misunderstanding;
- Conflicting information from another source or whistle-blower;
- A random check;
- Or, because there is information that is incorrect.
What does a tax investigation procedure involve?
During the investigation, a team from HMRC will audit your accounts and ask you a number of questions. They might ask to visit you in person at your home, business address or at your accountant’s office.
What are the possible outcomes?
What happens next depends on what HMRC finds. Some of the most common outcomes and solutions include:
- Overpaid tax
- In this instance, the taxpayer will receive a tax rebate with interest.
- Underpaid tax
- This outcome will result in the taxpayer being formally required to pay any tax owed within 30 days, possibly with interest added.
- Deliberate wrongdoing
- If HMRC conducts a tax investigation and conclude there was deliberate wrongdoing on the part of the taxpayer, then HMRC may escalate the case to criminal status.
- If this happens, you may have to pay a penalty. The amount will depend on factors such as why you underpaid or over-claimed tax, if you told HMRC about any mistakes as soon as possible, and if you were cooperative throughout the enquiry.
How can Seagrave French help you?
How can Seagrave French help you?
It is an unfortunate fact of business life that you may well come under enquiry by HMRC through no fault of your own or of your accountant. HMRC now investigates businesses at random as well as for specific reasons. A full investigation is not a pleasant experience for anyone. Without expert defence, it is possible to get trampled all over.
If you are selected at random, you need an accountant who knows how HMRC works and thinks and is prepared to fight your case. We make sure that Taxman keeps to their own internal guidelines and don’t overstep the mark. We will talk you through the enquiry process and what to expect and support you throughout.
There are various penalties HMRC can seek to impose following an enquiry for undeclared income. As well as having to pay the tax, you can find them seeking penalties up to an amount equal to the tax, so doubling your tax bill. Interest in the late payment of the tax is also part of the arrangement – not a pleasant experience. We can help you minimise these penalties.
Anti-investigation Scanning Checks
Whilst with random investigations anyone can come under enquiry, you can help to avoid the chance of an investigation into your affairs for other reasons. We know the triggers that often give rise to enquiries if not fully explained to HMRC when submitting Returns to them. Every Tax Return or set of accounts we submit to the Taxman goes through an anti-investigation scanning check to identify any areas that may lead to an enquiry before they are submitted without explanation. This really does help to minimise the chances of you being on the wrong end of an enquiry.
HMRC has powers to investigate income tax and corporation taxpayers at RANDOM.
With the ever-increasing risks of full tax enquiries and investigations, it’s worth considering protecting yourself from the accountancy costs of dealing with it as the amount of work involved is often substantial.
You can get cover for the following…
- Self-assessment enquiries
- VAT enquiries
- PAYE and benefits enquiries
- IR35 enquiries
Even if HMRC finds nothing as a result of any investigation, you will still have unexpected professional fees to pay as a result.
We cannot prevent you from being investigated by the Taxman, but we can help to ensure that you get the best possible support and advice without having to worry about the cost.
Whatever your ambitions, we will commit to them wholeheartedly and deliver the premium service you deserve. Get in touch today to book a chat with the experts at Seagrave French.