HMRC - Tax Enquiries
When HM Revenue & Customs (HMRC) issues a formal notice of their intention to make an enquiry in to a business’s/individual's tax affairs this does not automatically mean HMRC believe something is wrong.
HMRC routinely check a proportion of tax returns submitted to make sure they are satisfied the information returned is accurate and correct. Accordingly HMRC may 'randomly' select a tax return for enquiry.
However random enquiries usually only account for a relatively small percentage of overall tax enquiries, with the vast majority of enquiries undertaken because HMRC have reason to believe there could be discrepancies between the tax declared and the actual tax due.
The enquiry process
When HMRC opens an enquiry they will send the business/taxpayer a formal letter. In this letter HMRC will make it clear whether they are looking at specific areas of a tax return ('Aspect' enquiry) or, alternatively they may be planning a more detailed review and request to see all relevant business accounting records ('Full' enquiry).
Normally HMRC will expect an initial response within a period of 30 days from the date of the opening enquiry letter.
In the majority of all full enquires undertaken, HMRC will at some stage request a meeting. Additionally the Inspector dealing with the enquiry may also make further requests for more information and/or explanations.
Only once HMRC have carried out their reviews will they outline any areas of concern they may have, and, if they believe discrepancies have arisen resulting in an under declaration of tax, HMRC will provide further details of the additional tax liabilities due.
Of course not all tax enquiries give rise to further tax liabilities, and in some cases HMRC may even change a return to reflect lower figures, and agree to repay excess amounts of tax originally paid.
To facilitate closure, the business/taxpayer is encouraged to reach an agreeable settlement with HMRC, and where appropriate this will include agreement to a reasonable penalty, (which can be up to 100% of the agreed incremental tax liability payable), where applicable.
Once an enquiry has finished a formal 'closure notice' will be issued by HMRC and records held, returned to the business/taxpayer.
How we at turpin barker armstrong can help
From the moment the opening enquiry letter is received, we strongly recommend a business/taxpayer seek help.
With HMRC becoming much stricter with non-compliant taxpayers, and with increasing powers now given to HMRC Inspectors, it is essential that specialist advice and assistance be sought at the earliest opportunity. (Without proper professional representation it is possible larger tax assessments and higher tax penalties may result)!
At turpin barker armstrong we have considerable expertise in representing clients faced with a tax enquiry, providing the right level of support required to help bring the enquiry to a prompt and satisfactory conclusion.
We fully understand just how distressing a tax enquiry can be and therefore aim to work alongside our client at all times, attending meetings with HMRC where necessary, and negotiating fully with HMRC to ensure the business/individual pays only 'the right amount of tax' and no more.
We offer a truly personal service at a time when it is most needed and our fee structures are extremely competitive.
If you would like to discuss how we might be able to assist please contact us now to arrange an initial consultation, completely free of charge and without obligation.