Updated 6th July 2019
We have encountered occasions recently where an HMRC compliance check begins with a request for information and documents that may not be “reasonably required” It should be remembered that an HMRC compliance check will normally begin when the department feel that there is a tax risk. In other words that tax may have been lost as a result of an inaccurate return being filed.
The first question you should ask yourself is. What are HMRC checking? Strictly, a compliance check should be confined to the area of risk. That could be a specific aspect of a tax return or an entire entity, for example your business. The inspector will sometimes ask for sight of information that is not reasonably required during an HMRC compliance check. For example private bank statements, where they have yet to demonstrate that there are concerns about the integrity of a business tax return and/or supporting financial accounts submitted.
WHAT RISKS HAVE BEEN IDENTIFIED?
This is referred to internally as “breaking the records”. In other words HMRC will have highlighted a risk based upon a tax inspector’s review of the business records. Of course in such circumstances, it may be perfectly reasonable for HMRC to request sight of personal records. After all they have demonstrated a clear risk. However, in my view it would rarely be appropriate to ask for this information in an opening HMRC compliance check letter.
A NOTE OF CAUTION
An HMRC Compliance check can come in many guises and there is no hard and fast rule. My advice is simple. Be cautious and seek the advice of an experienced tax investigation specialist before embarking on any compliance contact with the taxman. Do not get yourself caught out with in an HMRC compliance check. You need peace of mind with tax investigation advice from an HMRC compliance check specialist. Admiral Tax Investigations can assist you with your HMRC compliance check. Supporting you right through the process to a satisfactory settlement.
Please take some time to read our additional information pages on HMRC compliance checks.
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