HMRC Tax Investigations

HMRC investigations often involve the launch of an enquiry into the affairs of a UK individual, business or other entity. It can cover  income, corporation, capital gains tax and VAT.

Investigation proceedings generally commence when the Inspector has concerns regarding information that has been supplied to them, usually information that can lead to a potential office

If you receive an investigation letter from HMRC, you can be reasonably sure that they feel you have underpaid on the amount that is expected.

Some of the most common reasons include:

  • A random check
  • A mistake or a misunderstanding.
  • You operate a ‘high risk’ business and accept a lot of cash payments
  • Your nnual accounts have continuously shown errors, so the HMRC has decided to have a look into your business
  • Your bank or another 3rd party has given information to the HMRC that warrants an investigation
  • You’ve been highlighted by the HMRC’s ‘super-computer’ which is a relatively new avoidance system which includes information from the Land Registry and Companies’ House.  If the computer finds an error, then the business will be subject to investigation by an HMRC inspector

It is important to understand the type of inquiry being conducted and consider to deal with it. Identifying the reasons behind the inquiry may assist, although HMRC will not disclose the detail at the beginning.

If you are aware of an anomaly in your business and you are unsure how to resolve it yourself, if you are concerned that you could be the target of an investigation, or if you find yourself on the receiving end of a hmrc investigation or prosecution; it is then that you need to seek expert, specialist advice immediately as to how best negate any trouble.

Types of Investigations

There are many forms of  investigations in the UK:

Code of Practice 9 – A procedure that HMRC use to investigate cases of suspected serious taxation fraud.

HMRC Special Investigations – A serious fraud investigation conducted under Code of Practice 9 where the perceived amount at risk is at least £500,000.

Civil Investigation of Fraud (C.I.F) – A serious fraud investigation conducted under Code of Practice 9 where the perceived amount at risk is at least £75,000.

Check of Self Assessment Tax Return – An HMRC compliance check focusing on one or more elements of your self assessment advice

VAT Investigation – An investigation focusing on indirect taxes or VAT.

Tax Credit Investigations – An investigation focusing on the credits received.

Avoiding disputes with HMRC can easily be avoided. Very often returns are  incorrect due to simple mistakes, accidents, oversight, confusion, or misunderstanding of the law. No matter what the reason, when incorrect returns are identified, they must be corrected, either immediately, or after the conclusion of any criminal proceedings that might be undertaken.

It is important to cooperate when an investigation has been requested and using the services of a good accountant is an essential requirement.

Tax Appeals

You can appeal an HMRC investigation if the tax tribunal decision isn’t successful. We can help by handling the end-to-end process as we have a team of experts who can carry out a tax audit and appeal on your behalf with an independent internal review.

Our specialists will build a case to be presented at the First Tier Tax Tribunal, which is independent of HMRC so they will hear the evidence impartially.

Engaging the services of a good accountant in advance will very likely avoid the type of scrutiny that can lead to an investigation. Contact us on 020 3086 7472 to see how we can assist you.