self assessment tax return

You may well have noted that there has been a recent hold placed upon HMRC’s tax investigation work due to the Covid-19 pandemic. This hold has now been removed with HMRC’s compliance engine now fully back up to speed. There will inevitably be an intensification in the departments compliance work The UK faces an almost unprecedented level of debt due to Covid. It makes sense then that the government is going to have to finance that debt. Tax investigation work is going to be very much at the sharp end of that financing. There has never been a better time to bring your tax affairs up to date.

Language used in a Check of self assessment Tax Return

You need to consider the language used by HMRC in any compliance check of self assessment tax return very carefully. Do not be fooled by what can appear, at first glance, to be a very friendly customer service enquiry.

HMRC begin by saying – “Every year we check a number of returns to make sure they are correct and that our customers are paying the right amount of tax.” You almost feel that you have been randomly selected?

These self assessment tax return checks are rarely a random affair. Random checks account for a tiny percentage of the overall number of compliance checks started by HMRC each year. The reality is that over 90% of HMRC checks are launched following a thorough risk assessment.

NEW APPROACH, SAME OBJECTIVE

Section 9A TMA 1970 is precisely the same tax investigation legislation applied by HMRC prior to launching this latest compliance check initiative. However friendly the language may appear to be in a check of self assessment return, you should, without question, consider yourself under tax investigation with all of the associated implications.

If you have received a letter from HMRC informing you that a check of self assessment tax return has commenced, the Inspector clearly feels that tax is at risk. In short, HMRC feels that tax has been underpaid. They are looking to recover it for the year of investigation and if applicable for earlier years too.

HMRC’s APPROACH

HMRC’s action will be determined by the nature and scale of the tax underpaid. If HMRC decides that your conduct during the year of investigation applies to earlier years – and the tax loss is significant, they will look to scale the irregularities back. You can be sure that HMRC will not write to you and commence this process without first doing their research. They will have compiled a comprehensive intelligence file, including information from third parties.

HMRC MISTAKES

Visit our FAQ page for more information on HMRC case selection prior to a check of self assessment tax return. HMRC makes mistakes in just the same way that we all do. They could be wrong!! That does not mean that you are not compelled to provide them with all relevant information and documents as required by them.

We have written an article covering requests for information and documents during an HMRC compliance check.

CHECK OF SELF ASSESSMENT PARTNERSHIP TAX RETURN SECTION 12A TMA 1970

If you receive a check of self assessment partnership tax return, you may wish to begin by reading our article “Why have I been selected for tax investigation?” before continuing. It provides some useful background information on HMRC case selection, prior to beginning a check of your self-assessment tax return. A check of self assessment partnership tax return issued under Section 12A TMA 1970 focuses on a partnership. The notice itself will generally be issued to the nominated partner.

CUT THROUGH THE JARGON

As with any compliance check issued by HMRC, you need to consider the language used very carefully. If you have received a letter from HMRC informing you that a check of self-assessment partnership tax return has commenced, the Inspector clearly feels that tax is at risk. In short, HMRC feels that tax has been underpaid. They are looking to recover it for the year of investigation and if applicable for earlier years too. Without question, a check of self-assessment partnership tax return is simply a tax investigation by another name.

EARLIER YEARS

If HMRC decides that your conduct during the year of investigation applies to earlier years and the tax loss is significant, they will look to scale the irregularities back. In such circumstances, the tax investigation will generally be settled via a contract arrangement. HMRC refer to such an agreement as a contract settlement. You can be sure that HMRC will not write to you without first doing their research. They will have compiled a comprehensive intelligence file, including information from third parties. You may wish to have a look through HMRC notes on self-assessment

FAQs

Now that you have read the background material relative to an HMRC check of self assessment tax return, please take some time to read through quick frequently asked questions guide. However, please always remember that the best way to get the clear no nonsense advice you need is to pick up the telephone and speak to us. Please do give us a call for a friendly, no judgement chat regarding your check of self assessment tax return.

What is the difference between a check of self assessment tax return and a tax investigation?

There really is no difference at all. HMRC have changed the language used in tax investigations over the years; but the risk levels, the intention, the approach and the result remain the same. If HMRC begin a check of self assessment tax return then you can be assured that the score produced by their risk driven interrogation of their internal systems is suggesting that something is wrong.

So is my check of self Assessment tax tax return based solely on a computer search?

Definitely not. HMRC will use their super computer to interrogate all tax returns according to a certain search criteria. The criteria will generally be set by the compliance manager and determined according to the needs of the office. However; this is not simply a computer based exercise. HMRC’s computer will simply select a list of cases produced around the criteria entered and then allocate each a risk score. This list will then be reviewed by an experienced HMRC investigator who will pick the cases thought to present the biggest risk.

What other pre-investigation checks to HMRC perform?

All HMRC compliance offices have a dedicated intelligence officer resource. Code of Practice 9 offices; who are looking at more serious cases of tax evasion have whole teams dedicated to intelligence building. The intelligence officer or team is tasked with interrogating all external sources of information available to HMRC. These include:

  • The internet
  • Social media
  • Banks and other financial institutions
  • The land registry
  • Local authorities
  • Comparisons with any other tax returns that have been filed

Further reading:-

Our FAQ page provides more useful background information on case selection.

What happens if my case is selected?

Your case will only be selected for a check of self assessment tax return if HMRC strongly feel that that there has been a loss of tax. This judgement will be based on each of the factors outlined above. If your case is selected for investigation then HMRC will write to you under Section 9a TMA 1970, notifying you that a compliance check or check of self assessment tax return has been opened. Their letter will likely be accompanied by a separate schedule detailing  exactly the information and documents that HMRC wish you to supply in order for them to complete their check.

You can read more about the opening HMRC check of self assessment tax return letter by visiting our dedicated page:-

HMRC tax investigation letter

So, if HMRC check my self assessment tax return they automatically think I am a tax fraudster?

The answer to this question is not definitely. However, make no mistake, if HMRC begin an investigation through a check of self assessment then they do feel you have done something wrong. This could either be through carelessness or though a deliberate attempt to deceive. Of course the language used in the opening letter cannot even suggest that your conduct has been prejudged. This is the reason for the helpful; almost customer service driven approach. You are probably familiar with the phrase “a wolf in sheep’s clothing”.

Should I just supply everything HMRC that request in their opening letter?

Absolutely not. Never step away from the fact that you are under investigation here. HMRC suspect that you have committed tax fraud. You must not start sending information and documents to HMRC if you do not know what you are doing or why you are sending. HMRC often make mistakes and step outside of the parameters of their own published legislation. You should never be frightened to challenge; but this is always best done by a tax investigation specialist.

Specialist advice prevents problems

Please; always seek professional advice and support before making any form of contact with HMRC. Mistakes early on can set the wrong tone and lead to very costly mistakes. A check of self assessment tax return can quickly aggravate and escalate. If you receive any form of compliance check letter such as this please call use immediately for a free consultation.

You can read more detailed information regarding HMRC requests for information and documents by visiting our dedicated page:-

HMRC requests for information and documents

Will I have to meet with HMRC during a check of self assessment tax return?

Many ill informed advisers will simply answer this question with a “yes”. Our approach is flexible and based upon its benefits to you and towards a satisfactory case settlement. You cannot be penalised for deciding not to meet with HMRC during a Local Compliance check of self assessment tax return. That situation changes during a mire serious intervention such a a COP 9 investigation; where failing to meet with HMRC can be viewed as a lack of cooperation. You can read more about meetings with HMRC by visiting our detailed guide:-

Meetings with HMRC

How long will my check of self assessment tax return take?

This is a very difficult question to answer. The length of your investigation can be determined by many factors. For example; the nature and scale, complexity and the weight of information that HMRC are requesting. We find the biggest determining factor resulting in a prolonged investigation is lack of knowledge. Well meaning intent can result in bad, ill informed decision making. That will only see your check of self assessment of self assessment tax protract and probably escalate.

Scaling back any tax loss identified as part of a check of self assessment tax return

You should also remember that HMRC are only use the year of check as a lever. It is highly likely that they will try to use any errors identified during your check of self assessment tax return to attack earlier years. HMRC tax investigation teams are yield driven; with financial targets to meet. The yield from a one year check of self assessment tax return is not the officers objective when they begin and investigation. They will be seeking a six year settlement; with tax, interest and penalties.

You can read more about HMRC procedures during a check of self assessment tax return by visiting our dedicated page:-

HMRC tax investigation procedures

Will HMRC charge me a financial penalty for any errors identified?

In most circumstances yes. HMRC’s approach to penalties is a complex area and should be discussed in detail with your chosen adviser. In the broadest sense, HMRC will look at their perception of the behaviours that have given rise to a loss of tax. Has your action been brought about by careless or deliberate action. This judgement will not only largely determine the level of penalty charged; but also the potential scale back of any irregularities identified.

You can read more detailed information on HMRC penalties by visiting our dedicated pages:-

Penalties for UK tax fraud

Tax evasion penalties

Is there any risk of me going to prison?

Any compliance intervention launched by HMRC is not to be underestimated. Whilst a check of self assessment tax return is a local compliance matter; conducted via civil procedures, if your case is not handled correctly it can quickly spiral out of control and become less manageable via conventional compliance check provisions.

However, If you do not cooperate fully or you make a materially false statement during a check of self assessment tax return then you could find yourself subject to a criminal investigation. However, HMRC will only launch a criminal investigation in the most grievous cases of tax evasion or where they feel it is in the public interest to do so. Please visit of dedicated page; HMRC Criminal Prosecution Policy for more detailed information.

A more aggressive approach for 2020 and beyond

Given the financial crisis that the UK now faces in the post Covid era, we are going to see an increasing focus on tax evasion. This is very simple rationale and sums. National debt equals increased taxes, this in turn equals an increase in the number of tax investigation cases.

Tax fraud has been a the forefront of the news agenda for some years now. The Covid-19 pandemic is the worst economic crisis the UK has seen in the modern era. If you have concerns regarding any irregularities in your tax affairs; however small, now is the time to come forward. Please take some time to read our dedicated pages on the voluntary disclosure process.

Self assessment tax return – Help is available

Do not panic. Specialist help is out there. The appointment of a specialist tax investigation adviser will help ensure that any check of your self assessment tax return is completed accurately, efficiently and in full compliance with HMRC legislation. Admiral Tax promises to achieve this in the shortest possible time frame, saving you money.

We all need a friend in our corner, particularly one who can offer the following:

  • A critical assessment of HMRC’s request to see documents and information
  • The satisfaction that you do in fact have a case to answer. HMRC can be wrong too
  • Specialist management of your tax investigation through to satisfactory closure
  • A comprehensive health check of your self-assessment return and/or supporting accounts
  • Recommend how we can save you some money elsewhere
  • Negotiate firmly with HMRC on your behalf, within the boundaries of published legislation
  • Ensure you that you achieve the best possible financial settlement via contract
  • Arrange a manageable time period for you to repay any tax agreed with HMRC
  • Offer you free advice on good accounting practice to avoid future problems

If you have any questions about your self assessment tax return or have received a letter from HMRC please do not hesitate to contact a qualified professional tax advisor before making contact with HMRC.