HMRC Tax Investigation Accountants

HMRC investigates a high number of businesses, and the first quarter of 2021 saw them open 102,000 investigations. However, these do not always result in tax penalties. Often, HMRC investigates because of a problem spotted in certain sections of your returns. They also conduct investigations randomly – powerful new software can trace even the smallest discrepancy in spending or earnings.

The process starts with a letter or phone call from HMRC Tax Investigation Accountants, advising that an investigation has been initiated and detailing the areas they are investigating. It may then ask for further information such as bank statements, invoices and receipts. They may then arrange a meeting to discuss their findings. This can be stressful for everyone involved, but it is important to cooperate fully. This will reduce the likelihood of penalties and mean that the enquiry is wrapped up as quickly as possible.

Having clean, up to date records is the best way to avoid an investigation and reduce stress levels. Jarvis tells the story of one micro-business owner whose immaculate book keeping allowed him to cruise through an extensive HMRC review with little fuss.

When a taxpayer is investigated, they can expect to have to provide a lot of information in a short space of time and then have to wait for the outcome. This could take weeks, months or years, especially in full enquiries.

This is due to the amount of work that HMRC have to do to investigate everything they are investigating, and also because there are a large number of individuals who can be investigated simultaneously. This is why it is so important to use an accountant who can manage the process on your behalf, taking away the worry and anxiety and ensuring that your interests are represented.

It is also important to remember that the outcome of an HMRC investigation can have significant financial implications – you could be formally required to pay any tax owed within 30 days, potentially with interest added. In some cases, the investigation can even lead to a criminal prosecution if there is evidence of deliberate wrongdoing.

The end of an investigation is usually marked by receiving a decision notice or agreeing to an agreed contract settlement. This can either be with no adjustment to your tax affairs, or with adjustments depending on the situation.

HMRC can focus on certain industries that they deem high risk, for example those working in construction or private health care. They may also target specific individuals based on their name, address or other factors such as where they live or where they work. It is also not uncommon for HMRC to investigate businesses if someone has reported them to them. This can happen if a customer reports you for making false or misleading claims or if you are working in the cryptocurrency sector. HMRC will then decide if they can go further with the investigation and take action accordingly.