THE KEY TO HMRC TAX INVESTIGATION SUCCESS
An HMRC tax investigation is an incredibly intense and stressful experience. If it is handled poorly and HMRC feel that you are not cooperating; then your case can easily protract or even escalate. In this article we focus on the importance of good communication with HMRC and offer advice on some key areas that will likely arise during HMRC compliance checks.
Progressing your tax investigation
There is nothing worse for any of us than being left in the dark. The same principles apply to dealing with HMRC. The question is how to do this effectively. Below is our advice on best practice during an HMRC tax investigation.
- Do I have to supply all of the documents HMRC are requesting as part of my compliance check?
- Is it a good idea to meet with HMRC during an investigation?
- How far can HMRC go back during a tax investigation?
- What are the HMRC time limits?
- What is the best way to ensure the best final settlement with HMRC?
What information or documents I am obliged to supply?
We have a familiar refrain that we repeat to all prospective clients. That is; HMRC are entitled to ask you to supply anything they see fit during the course of a tax investigation. They key question is; are you legally obliged to supply it? This is an important question to consider; when communicating with HMRC effectively with a view to advancing your investigation to a satisfactory closure. Our intention is not to be obstinate or argumentative; simply for the sake of it. Remember our key responsibilities when representing you. We ensure:
- that you are treated fairly and equitably
- that HMRC requests are reasonable
- that the information or documents being requested are required to check your tax position
- that your rights are protected
You should always seek specialist advice before supplying HMRC with either information or documents during the course of any tax investigation. We have written a detailed guide on this subject which you should after digesting this article.
HMRC requests for information and documents
Should I meet with HMRC during my tax investigation?
HMRC will always seek a meeting with you. Their motives; or so they will tell you, is to advance their compliance check in the most efficient way possible. However, there are other factors to consider.
Meetings with HMRC are usually very stressful occasions. It is human nature for any HMRC investigator to seek to exploit that situation. You can quickly find yourself under pressure, confused and lacking in clarity. Our advice to is to consider any meeting with HMRC based upon its merits.
- Opening meetings; which essentially involve gathering can be dealt in writing
- Progress meetings can be dealt with in the same vein; as long as you are communicating with HMRC effectively and on time
- Settlement meetings can be of benefit in order to find closure to an investigation that is fair to all parties
Please remember that you are not obliged to meet with HMRC at any stage of an investigation. HMRC cannot accuse you of not cooperating. You cannot be penalised in anyway for not meeting with the Inspector. Your obligations begin and end with providing information and documents that are reasonably required to check your tax position.
Please take some time to read our comprehensive guides to meetings with HMRC during a tax investigation
Meetings with HMRC
HMRC compliance checks
Code of Practice 9 investigation.
Please always seek advice from a specialist before agreeing to meet with HMRC during any compliance check of your self assessment tax return
How far can HMRC go back during a tax investigation?
This is one of the most frequently asked questions we are asked and it is one that needs careful consideration. The key element to consider is behaviour. The circumstances that have lead to irregularities resulting in unpaid taxes. This is an area that needs much fuller explanation; so please always call us for detailed advice. But in its most simplistic terms:
- If HMRC establish that your behaviour has been deliberate; then they are legally entitled to go back 20 years; using a piece of legislation known as the discovery provisions outlined at Section 29 TMA 1970.
- If you have been careless then it is most likely that HMRC will focus on the one year that the irregularities occurred
Again this is a very complicated area of legislation. Please always seek specialist advice before going any further.
What are the HMRC tax investigation time limits?
HMRC ordinarily have 12 months from the fixed filing date to launch a compliance check of self assessment tax return. For example you file your 2016/17 tax return on 31st January 2018. HMRC have until 31st January 2019 to begin any compliance check.
Should your tax return be filed late. HMRC have 12 month from the date the return was actually submitted.
The rules are more complicated should HMRC find something out and believe that you have deliberately evaded tax in earlier years. Remember they the big stick of discovery. You can read more about the discovery provisions and its application by visiting the HMRC website at the link below
S29 TMA 1970
If you are suspected of serious tax fraud and HMRC write to you with an offer to take part in the Contractual Disclosure Facility under Code of Practice 9; please take some time to read our detailed guidance.
What is the best way to ensure a fair tax investigation settlement with HMRC?
You simply must take advice from a tax investigation specialist to who communicate with HMRC throughout your compliance check. Do not be tempted to begin dealing with HMRC yourself only for things to go wrong. Early, proactive action is always best. You will only ever ensure the very best tax investigation settlement possible with expert advice.
We never leave you in the dark
There is nothing worse than feeling at a loss or in the dark when in the midst of a full blown HMRC compliance intervention.We keep our clients fully informed at every stage of the HMRC tax investigation process. Whether it be an HMRC compliance check or a serious fraud investigation under Code of Practice 9, you will never feel lost or alone.
WHAT DOES THIS MEAN FOR OUR CLIENTS?
In terms of our HMRC tax investigation clients, we achieve this by making practical use of every communication tool at our disposal; including:
- Royal Mail and/or Email – You are copied in on every item of correspondence using the medium of your choice.
- Regular no fee client case conferences held either in person or over the telephone with your dedicated, personal tax investigation or compliance check specialist
OUR HMRC TAX INVESTIGATION APPROACH
Perhaps more important than communicating with you, how well does your HMRC tax investigation specialist communicate with the office enquiring into your affairs. You need to feel safe in the knowledge that your HMRC tax investigation adviser has developed a solid working relationship with the lead investigator, who has conduct of your case.
If communication is flawed or breaks down your HMRC tax investigation will become protracted and contentious. If that happens, you will pay the price. Consequently; our approach during an HMRC tax investigation is based firmly around rapport, where possible.
We seek open and effective communication with the HMRC department conducting your enquiry.
HMRC TAX INVESTIGATION SERVICES AND ADVICE
Our tax investigation services cover every aspect of HMRC’s compliance work. Whether it be an HMRC tax investigation focusing on one aspect of your affairs or something much more complex, we can offer you the dedicated support that you