Tax Investigation Frequently Asked Questions
Below we answer the most frequently asked questions regarding the HMRC tax investigation process. This page is designed to be a quick guide only. Please visit our dedicated content for more detailed information. Better still; please pick up the telephone and ask. Our initial consultation is free, with no time limits. We will spend as much time with you as you need. Remember, we are here to help; not to judge.
How will HMRC contact me to inform me that a tax investigation underway?
HMRC will always contact you in writing. The team contacting you will be determined by the type of fraud that HMRC suspect. HMRC local compliance deal with the majority of tax investigations through compliance checks and checks of self-assessment tax returns. HMRC’s Fraud Investigation Service deal with more serious cases of suspected tax fraud via the contractual disclosure facility under Code of Practice 9
Why have I been selected for tax investigation?
HMRC select most cases according to risk. They have sophisticated software to analyse their own internal systems and the internet. They also have access to various other information sources which they will scrutinise before launching an inquiry.
What information and documents are HMRC entitled to see?
If HMRC are checking your self-assessment tax return they are only entitled to information and documentation reasonably required to check your tax position. The situation is much more complicated should you receive contact from the fraud investigation service. Regardless you should seek advice from a tax investigation specialist before responding to any HMRC compliance intervention.
Do I have to respond to HMRC?
Yes. If HMRC launches a tax investigation they clearly feel that there is a strong risk that tax has been underpaid. Ignoring the HMRC letter could lead to formal action being taken against you; resulting in daily penalties.
Can I appeal against the information documents that HMRC are requesting?
Yes; if HMRC is asking for information or documentation that is not reasonably required to check your tax position you can appeal to the tax tribunal. Against always seek tax investigation advice from a specialist before responding to HMRC
Do I have to attend meetings with HMRC?
No; you do not. Nor can HMRC penalise you for not doing so. Our advice in the first instance is to appoint a tax investigation specialist who deal with the matter via correspondence.
How far back can HMRC go during a tax investigation?
That rather depends on the nature and scale of the irregularities committed. In cases where there has been deliberate behaviour resulting in a multi-year tax loss; HMRC can go back up to 20 years.
How long will my tax investigation take?
It is difficult to give a definitive answer to this question. A local compliance check of self-assessment could be settled within as little as 6 to 8 weeks. Investigations involving serious fraud or disclosures can take several months and beyond. Much also depends upon the competence and motivation of the tax investigation specialist you appoint. Our average time to settlement across the whole range of tax investigations that we deal with is just 6 months.
Will HMRC give me time to pay any tax that I owe?
Yes; within reason. Your adviser should be able to arrange a time to pay as part of any settlement or negotiate directly with HMRC debt management.
Will HMRC make me bankrupt if I cannot pay the tax owed?
In extreme cases yes. If HMRC feels that they cannot secure payment of the tax due; after exploring a suitable time to pay arrangement, they will likely pursue you through the courts for payment. This could result in a county court judgment and eventual bankruptcy.
Will HMRC publish my name in the newspapers?
Only in the most serious cases of tax evasion. HMRC operates a programme known as Managing Deliberate Defaulters. If you are placed in this programme your future tax affairs will come under much closer scrutiny and HMRC could publish your name; together with the offenses committed. Appointing the right adviser should minimise or even remove the risk of this happening
Can I go to prison for tax offenses?
HMRC prosecute approximately 1000 taxpayers per year. Criminal investigations are reserved only for the most grievous cases of tax fraud. You can read more about HMRC criminal prosecutions by reading our various articles on this website. Please use our search facility to the right.