Tax enquiries - compliance checks

Why am I under investigation?

HMRC carries out compliance check investigations to make sure declarations made on an individual’s tax return accurately reflect their position for that tax year. Compliance checks can either target a particular aspect of your tax return (known as an aspect enquiry), such as a claim for relief or a specific item of income, or they can be a full enquiry into all areas.

HMRC rarely selects cases at random. More than 90% of investigations will be initiated because HMRC holds information suggesting something is wrong, although they may not admit this from the outset.

What are HMRC’s powers?

HMRC will request certain documentation to establish whether you have underpaid tax and to understand the behaviour that led to your underpayment. Such requests can be onerous, and if you don’t have the knowledge or confidence to challenge HMRC, you could find yourself subject to what can only be described as a ‘fishing expedition’, where HMRC take advantage of your willingness to cooperate. Where a business is involved, HMRC can also ask to inspect the business premises.

Such checks can be extremely disruptive and stressful for individuals and businesses. Appointing the right advisor to deal with HMRC on your behalf will allow you to continue to focus on developing your business and lead to a quicker resolution of your case.

Penalties

Once an enquiry has been resolved, HMRC may impose penalties. The level of penalty will depend on the behaviour that led to the inaccuracy in the return and the level of cooperation that you’ve shown throughout the enquiry. Further information relating to penalties following the conclusion of an enquiry can be found here.

How we can help

When considering appointing specialist representation, advisers and taxpayers should ask themselves these questions:

• Do you feel comfortable dealing with HMRC?
• Are you able to manage and control HMRC or have you now lost control?
• Do you have up to date knowledge of HMRC powers?
• Are there any errors in your tax affairs that you should disclose?
• Are you concerned about being publicised as a tax evader?
• Can you restrict the extent of information you provide to HMRC, without adversely affecting the extent of your penalty mitigation?

If you choose to get specialist advice from Buzzacott, we will:

• Carry out a comprehensive review of your compliance check to ensure we have a full understanding of the issues and risks you are facing;
• We will work with your existing adviser, if you have one, and prepare a strategy going forward to minimise your potential exposure to unnecessary tax, interest and penalties;
• Should a disclosure be necessary, we will present this to HMRC to ensure that you are treated fairly and proportionately; and
• Aim to fast track your compliance check to resolution and closure of all issues at minimum cost and disruption to you.

Awarded Best Tax Disputes/Investigations Team

Buzzacott’s Tax Investigations and Dispute Resolution team has been honoured as the ‘Best Tax Disputes/Investigations Team’ at the prestigious Tolley’s Taxation Awards 2019. These awards recognise the finest achievements and talents of remarkable individuals and teams across the entire tax profession. The team is led by Mark Taylor, who is a recognised expert on all areas of tax investigations and disputes.

We can guide you through the compliance check process and act as your representative and agent, ensuring you have minimum contact with HMRC and safeguarding your best interests.