HMRC Tax Investigations Advice in London

1. HMRC Tax Investigations Advice

2. Tax audits and inspections can be complicated and stressful, so seek professional advice as soon as a tax investigation begins unless you are certain of your position. Investigations frequently result in unexpectedly large insolvency, and the need for a time-to-pay arrangement, company voluntary arrangement, or even a creditors’ liquidation. tax bills, a voluntary

3. HMRC Tax Investigations: The Basic Facts While random HMRC Tax investigations used to be a rare occurrence, the tax authorities now have a wide range of sophisticated and effective tools at their disposal, making consultants who engage in risky behavior the most likely targets. HMRC investigations are aimed at determining whether accurate information has been provided, as well as whether accurate tax amounts have been paid.

4. Who is Likely to Face an HMRC Tax Investigation? Tax inspections are most common in businesses that are registered for VAT or PAYE, two areas where mistakes are common. Routine tax audits focusing on income tax or corporation tax are much less likely, unless HMRC has reason to believe you are concealing income or filing returns incorrectly. Be aware that deliberate concealment or even fraudulent activity investigations. And ignorance defense. can result rarely in a criminal sufficient is If any of the following apply to you are far more likely to be the subject of a tax investigation: You make mistakes on your tax returns that need to be corrected You file returns or pay tax late Your expenses are unusually high for your industry ● ● ●

5. Types of Tax Investigations Aspect, investigations are the three types of tax investigations. full, and random Aspect enquiries will focus on one or more areas information; full involve an inspection of your entire tax return; and random enquiries are a tool to evaluate tax returns in areas that are deemed to be high risk. All of them serious. of enquiries your tax will can be very

6. The HMRC Tax Investigation Process Explained HMRC will write or call you to let you know about the investigation and what they want to look into. A tax investigation will begin with a letter requesting information (referred to as an “information notice”). During a tax audit, the inspector will usually want to meet with you and look over your tax records. If you are the subject of a tax investigation, the letter will specify which parts of your tax return HMRC wants to examine. This might be: Your self-assessment tax return Your business tax return PAYE records and returns Your financial statementsand tax calculations ● ● ● ●

7. Dealing with a Tax Investigation: What to Expect HMRC assistance genuinely attempting to file tax returns and make timely payments. If you made an honest mistake, you shouldn’t be concerned because HMRC has a number of initiatives to assist business customers, including Time to Pay. aims to small provide businesses the necessary that to are If you don’t already have one, you should think about hiring a specialist tax accountant. Just as you wouldn’t try to fix your own boiler, this is one instance where professional assistance is invaluable. Tax investigation accountants will assist you in meeting your obligations on time and with the least amount of stress possible.

8. Once a tax investigation begins, it can take months or even years to complete. It can also be expanded to cover a wider range of areas. For example, what may have begun as a corporation tax investigation may turn into inquiries into the director’s personal tax affairs. In this case, an expert’s help can be invaluable, as they can take on a lot of the burden and advise you on the best course of action if HMRC is being unreasonable or requesting too much information.

9. What Costs are Involved in an HMRC Tax Investigation? The HMRC tax investigation procedure is, without a doubt, inconvenient, intrusive, and costly. One of the most significant costs you’ll face as a business owner/director is the time you’ll have to spend dealing with HMRC rather than focusing on growing your company. You will, however,incur a number of additional costs. While HMRC will cover the costs of the investigation, an investigation will typically require the preparation of books and records prior to the inspector visiting your premises, which is another area where costs can be incurred.

10. If HMRC finds you to be at fault after the investigation is completed, you may be subject to financial penalties. This will include the unpaid tax liability, any interest due from the original payment due date, and a penalty of up to 200 percent of the original liability. Tax investigations take an average of 16 months to complete businesses. for larger While investigation are unlikely to have a significant impact corporation’s balance sheet, a lengthy tax investigation could spell big trouble for a smaller company. This is especially true if there are substantial interest and financial penalties to be paid. the costs of an HMRC on a large

11. How Much Power Do HMRC Tax Investigators Have? The majority of SMEs only deal with HMRC to file returns and pay taxes, but tax investigations can happen at any time. That is to say, you do not have to do anything wrong to be approached by an HMRC investigationofficer. If you’re under investigation by HMRC, it’s important to understand what the investigators can and can’t do. Looking for confidential HMRC Tax Investigations Advice in London? Pearl Lemon Accountants are dedicated to reducing the stress of a tax investigation.

12. They have to tell you what taxes they're looking into. If HMRC decides to investigate you, it must specify which aspect of your taxes it is looking into as a part of the HMRC tax investigation procedure. review the records relating to the tax, duty, or tax credit we have told you we will be looking at,” HMRC states. If we plan to review multiple taxes at the same time, we’ll let you know ahead of time and give you the optionto decline.” “We will only HMRC information parties. You have the right to refuse if an investigator is reviewing your VAT return but also requests to see your corporation tax records without giving you prior notice. has broad from authority taxpayers to and collect third

13. HMRC investigators have the authority to inspect a company's premises. Although most visits are pre-announced, the number of unannounced visits by tax inspectors and investigating officers from HMRC has increased in recent years. Officers in charge of investigationscan: Inquire about the company’s books and records, as well as the owners and employees. Computers can be searched, and records can be removed for examination. HMRC has the authority to inspect third party premises, but it will only do so if the premises are used for business purposes and stock or other assets are stored there. An inspection notice can be appealed, but there is no right of appeal if the notice has been approved by the Tax Tribunal. Obstruction can also result in penalties from HMRC. ● ● ● ●

14. If HMRC suspects you of committing or intending to commit fraud, an investigation can be launched under the Code of Practice investigationprocedure. 9 fraud HMRC investigates and settles tax fraud cases in recent years by introducing the Contractual Disclosure Facility (CDF). This encourages the person under investigation to fully intentional or unintentional attempts to defraud the tax system. has changed the way it disclose any

15. Is There a Right to Appeal? You have the right to appeal to HMRC at any time if you believe your tax affairs investigated unnecessarily unfairly. are being or HMRC process escalating appeals. A tax expert is required to best understand how to proceed, as any mistakes could jeopardizeyour chances of success. follows for well-defined reviewing a and

16. How Pearl Lemon Accountants Can Help We can help you if you’re having trouble making HMRC payments or need assistance dealing with HMRC threats regarding VAT, PAYE, self- assessment, or corporation tax issues. Better still, we can help ensure you are never put into the position to be on the receiving end of an HMRC tax investigationat all.