HMRC Tax Investigation

Description

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A wide range of taxes can be reviewed, such as income tax, capital gains tax, inheritance tax, corporation tax, or VAT. Investigations can cover the tax affairs of various taxpayers, including companies, individuals, businesses, partnerships, or trusts. HMRC can also examine a business's role as an employer by investigating how it operates PAYE on the pay and benefits provided to employees (including a company’s directors).

 

Different Levels of Investigation

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Some tax investigations, whether personal or corporate, can be minor and straightforward, often resolved through an exchange of letters between HMRC and the taxpayer’s advisor or agent.

 

However, most cases involve more extensive scrutiny. HMRC may examine business and personal records to ensure all profits and gains have been declared and taxed correctly. This often includes interviewing the taxpayer or visiting business premises. Such investigations can be lengthy and intrusive.

 

Cases involving suspected tax avoidance are handled under a special procedure outlined in Code of Practice 8.

 

Cases involving suspected tax fraud or evasion are typically managed under Code of Practice 9. In the most serious instances, HMRC may pursue a criminal prosecution.

 

Investigations can escalate if new information emerges or if the taxpayer’s advisor mishandles the enquiry. Therefore, it is recommended that taxpayers seek specialist tax investigation advice at the outset of any HMRC enquiry.

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Cases Using Civil Procedures

The majority of HMRC tax investigations are conducted using civil procedures, aiming to reach a financial settlement that usually includes the underpaid tax, interest on the underpaid tax, and a financial penalty.

 

Cases Using Criminal Procedures

While comparatively rare, HMRC may choose to prosecute a taxpayer through the criminal courts. In these cases, HMRC seeks to recover the tax and interest, but instead of a financial penalty, they pursue a prison sentence.

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How We Can Help

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Legislation imposes restrictions on HMRC's actions, and we ensure that the Tax Inspector conducting the enquiry does not exceed their legal powers. We assess the seriousness of the HMRC investigation by evaluating who is leading the investigation and the nature of their questions.

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We provide the best advice on dealing with HMRC to achieve a quick settlement while minimising your tax exposure. We handle the investigation professionally to prevent escalation and avoid you being named and shamed.

 

If additional tax is due, we present your case in the best light to minimise your liabilities. If you cannot pay the tax in one lump sum, we will negotiate a time-to-pay arrangement with HMRC on your behalf.​ We strive to alleviate the pressure on you during the investigation by negotiating with HMRC on your behalf. We keep you informed throughout, and the final decision to accept the negotiated proposals will always be yours.

 

If HMRC has opened an enquiry into your tax affairs or those of your business, please contact us for a free, confidential, and no-obligation discussion. We are happy to offer an initial meeting free of charge to prospective clients.