HMRC Tax Investigations Advice in London

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HMRC Tax Investigations Advice
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• Tax audits and inspections can be complicated and
  stressful, so seek professional advice as soon as
  a tax investigation begins unless you are certain
  of your position.
• Investigations frequently result in unexpectedly
  large tax bills, insolvency, and the need for a
  time-to-pay arrangement, a company voluntary
  arrangement, or even a creditors voluntary
  liquidation.

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HMRC Tax Investigations The Basic Facts

• While random HMRC Tax investigations used to be a
  rare occurrence, the tax authorities now have a
  wide range of sophisticated and effective tools
  at their disposal, making consultants who engage
  in risky behavior the most likely targets.
• HMRC investigations are aimed at determining
  whether accurate information has been provided,
  as well as whether accurate tax amounts have been
  paid.

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Who is Likely to Face an HMRC Tax Investigation?

• Tax inspections are most common in businesses
  that are registered for VAT or PAYE, two areas
  where mistakes are common.
• Routine tax audits focusing on income tax or
  corporation tax are much less likely, unless HMRC
  has reason to believe you are concealing income
  or filing returns incorrectly. Be aware that
  deliberate concealment or even fraudulent
  activity can result in criminal investigations.
  And ignorance is rarely a sufficient defense.

• If any of the following apply to you are far more
  likely to be the subject of a tax investigation
• You make mistakes on your tax returns that need
  to be corrected
• You file returns or pay tax late
• Your expenses are unusually high for your industry

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Types of Tax Investigations

• Aspect, full, and random investigations are the
  three types of tax investigations.
• Aspect enquiries will focus on one or more areas
  of your tax information full enquiries will
  involve an inspection of your entire tax return
  and random enquiries are a tool to evaluate tax
  returns in areas that are deemed to be high risk.
  All of them can be very serious.

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The HMRC Tax Investigation Process Explained

• HMRC will write or call you to let you know about
  the investigation and what they want to look
  into. A tax investigation will begin with a
  letter requesting information (referred to as an
  information notice). During a tax audit, the
  inspector will usually want to meet with you and
  look over your tax records. If you are the
  subject of a tax investigation, the letter will
  specify which parts of your tax return HMRC wants
  to examine.This might be
• Your self-assessment tax return
• Your business tax return
• PAYE records and returns
• Your financial statements and tax calculations

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Dealing with a Tax Investigation What to Expect

• HMRC aims to provide the necessary assistance to
  small businesses that are genuinely attempting to
  file tax returns and make timely payments. If you
  made an honest mistake, you shouldnt be
  concerned because HMRC has a number of
  initiatives to assist business customers,
  including Time to Pay.
• If you dont already have one, you should think
  about hiring a specialist tax accountant. Just as
  you wouldnt try to fix your own boiler, this is
  one instance where professional assistance is
  invaluable. Tax investigation accountants will
  assist you in meeting your obligations on time
  and with the least amount of stress possible.

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• Once a tax investigation begins, it can take
  months or even years to complete.
• It can also be expanded to cover a wider range of
  areas. For example, what may have begun as a
  corporation tax investigation may turn into
  inquiries into the directors personal tax
  affairs. In this case, an experts help can be
  invaluable, as they can take on a lot of the
  burden and advise you on the best course of
  action if HMRC is being unreasonable or
  requesting too much information.

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What Costs are Involved in an HMRC Tax
Investigation?

• The HMRC tax investigation procedure is, without
  a doubt, inconvenient, intrusive, and costly.
• One of the most significant costs youll face as
  a business owner/director is the time youll have
  to spend dealing with HMRC rather than focusing
  on growing your company. You will, however, incur
  a number of additional costs.
• While HMRC will cover the costs of the
  investigation, an investigation will typically
  require the preparation of books and records
  prior to the inspector visiting your premises,
  which is another area where costs can be incurred.

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• If HMRC finds you to be at fault after the
  investigation is completed, you may be subject to
  financial penalties. This will include the unpaid
  tax liability, any interest due from the original
  payment due date, and a penalty of up to 200
  percent of the original liability. Tax
  investigations take an average of 16 months to
  complete for larger businesses.
• While the costs of an HMRC investigation are
  unlikely to have a significant impact on a large
  corporations balance sheet, a lengthy tax
  investigation could spell big trouble for a
  smaller company. This is especially true if there
  are substantial interest and financial penalties
  to be paid.

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How Much Power Do HMRC Tax Investigators Have?

• The majority of SMEs only deal with HMRC to file
  returns and pay taxes, but tax investigations can
  happen at any time. That is to say, you do not
  have to do anything wrong to be approached by an
  HMRC investigation officer.
• If youre under investigation by HMRC, its
  important to understand what the investigators
  can and cant do. Looking for confidential HMRC
  Tax Investigations Advice in London? Pearl Lemon
  Accountants are dedicated to reducing the stress
  of a tax investigation.

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They have to tell you what taxes they're looking
into.

• If HMRC decides to investigate you, it must
  specify which aspect of your taxes it is looking
  into as a part of the HMRC tax investigation
  procedure. We will only review the records
  relating to the tax, duty, or tax credit we have
  told you we will be looking at, HMRC states. If
  we plan to review multiple taxes at the same
  time, well let you know ahead of time and give
  you the option to decline.
• HMRC has broad authority to collect information
  from taxpayers and third parties. You have the
  right to refuse if an investigator is reviewing
  your VAT return but also requests to see your
  corporation tax records without giving you prior
  notice.

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HMRC investigators have the authority to inspect
a company's premises.

• Although most visits are pre-announced, the
  number of unannounced visits by tax inspectors
  and investigating officers from HMRC has
  increased in recent years.
• Officers in charge of investigations can
• Inquire about the companys books and records, as
  well as the owners and employees.
• Computers can be searched, and records can be
  removed for examination.
• HMRC has the authority to inspect third party
  premises, but it will only do so if the premises
  are used for business purposes and stock or other
  assets are stored there.
• An inspection notice can be appealed, but there
  is no right of appeal if the notice has been
  approved by the Tax Tribunal. Obstruction can
  also result in penalties from HMRC.

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• If HMRC suspects you of committing or intending
  to commit fraud, an investigation can be launched
  under the Code of Practice 9 fraud investigation
  procedure.
• HMRC has changed the way it investigates and
  settles tax fraud cases in recent years by
  introducing the Contractual Disclosure Facility
  (CDF). This encourages the person under
  investigation to fully disclose any intentional
  or unintentional attempts to defraud the tax
  system.

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Is There a Right to Appeal?

• You have the right to appeal to HMRC at any time
  if you believe your tax affairs are being
  investigated unnecessarily or unfairly.
• HMRC follows a well-defined process for reviewing
  and escalating appeals. A tax expert is required
  to best understand how to proceed, as any
  mistakes could jeopardize your chances of success.

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How Pearl Lemon Accountants Can Help

• We can help you if youre having trouble making
  HMRC payments or need assistance dealing with
  HMRC threats regarding VAT, PAYE,
  self-assessment, or corporation tax issues.
  Better still, we can help ensure you are never
  put into the position to be on the receiving end
  of an HMRC tax investigation at all.

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