Self Assessment Tax Investigation

Code of Practice 11 - Self Assessment

By their very nature, the worry caused in a HMRC tax investigations can damage your personal relationships, grind away at your health and seriously affect your ability to work effectively.

Contact us ASAP. You will feel a great weight lifted from your shoulders, allowing you to get on with your life, assured in the knowledge we are fighting your corner with the taxman.

HMRC will normally explain the type of check being opened and may issue relevant compliance check factsheets. If the matter is handled under Code of Practice 9, HMRC suspects serious tax fraud and the response should be handled with particular care.

Things you should know

The Friendly Letter

HMRC may open an enquiry to check that a tax return is correct or to ask for more information about the figures. An enquiry does not automatically mean HMRC believes there has been wrongdoing, but the response still needs to be accurate and carefully handled.

That sounds like a straight forward friendly enquiry. Make no mistake, the taxman suspects that you owe tax or VAT and he is coming to get it. You haven't been selected at random - HMRC now has to justify the amount of money it spends on an investigation in terms of the amount of money recovered.

Without the right advice and representation, a tax investigation can spiral out of control - Call us ASAP.

There is no Choice

There is no way to stop a tax investigation. You comply with the inspector's requests for information.

Guilty until Proven innocent

Tax legislation treats you as guilty until you prove yourself innocent. Under self assessment, you have a duty of care to ensure that your tax affairs are correct. Even minor mistakes are 'proof' of dishonesty for the tax man.

The taxman can go back six years

If HMRC identifies an error on a current tax return, it may consider whether the same issue affects earlier years. Assessments can include tax, interest and penalties. In deliberate cases, including serious tax fraud or some offshore irregularities, HMRC may be able to look back up to 20 years under the Taxes Management Act 1970.

The Interview

HMRC will no doubt invite you along for an interview. You are not legally obliged to attend this interview but the tax man might assume you are hiding something. If they subsequently discover that more tax is payable, they may increase levels of penalty. If you go to the interview, be aware that the tax man will be highly skilled in interview technique and you may leave yourself open to an attack even if you have done nothing.

For peace of mind, Get our tax investigation specialist on your side.

Unlimited Resources and Power

HMRC will invest the time required in analysing your records and asking lots of questions in to recover unpaid tax. You will be put through the ringer and ground down into submission, agreeing to pay what ever the ask for in order to make the investigation go away.

Don't give in to bully boy tactics - Call us

Inspectors are on a Bonus

That's right - in the case of successful recovery of tax, the inspectors are paid a bonus. They also reward when the achieve targets. HMRC expects a successful conclusion to in over 75% of all investigations. This means that 3 out of 4 people under investigation will end up paying extra tax, penalties, interest and professional fees.

The average tax investigation lasts 18 months and results in a tax settlement of around £3,000 and will cost you £3,000 in professional fees.

Information Sharing

The Tax Office and VAT Office have been combined and now share all information. The Internet is used to gather business information. HMRC also pays informers for sensitive information

Business Profiles

HMRC have profiles of every type of business sector imaginable. If information on your tax return is out of sync with this profile, you return will be flagged up for investigation. One of the principal statistics used is based on gross profit margin comparisons. You will need a set of accurate accounts to defend against unrealistic comparisons based on on the business economics model. Conversely if your books are inaccurate you will find it difficult to defend your case.

Higher targets

The tax office wants to collect an extra 25% tax year on year from investigations. With government finances under pressure, more and more resources are being made available. 'Campaigns' are launched from time to time to target particular business. Examples are plumbers, people who rent a second property, chiropractors etc.

How We Can Help

• All contact with HMRC is through us
• We manage HMRC technical challenges with ease
• We can liaise with your solicitor and accountants
• We will keep updated at every turn
• We will fight your corner and make sure you pay only what is due
• We will take away the stress and worry, allowing you to sleep at night

Without exception, when the taxman comes knocking, he wants to recover tax and VAT. In serious cases, we have saved companies literally tens of thousands of pounds - a fraction of the fees that we charge.

Contact us TODAY for some friendly, helpful advice.