Hidden Economy Teams (HET) are specialist HMRC units whose sole purpose is to identify individuals, businesses or other entities operating outside of the tax system. In other words those entities who are failing to meet their tax obligations. Hidden Economy Teams are staffed by experienced HMRC investigators; with dedicated resources tasked solely with those individuals who are running businesses and not paying their taxes.
HOW DO THEY OPERATE?
HMRC Hidden Economy Investigators are supported by support staff whose responsibility is to gather intelligence prior to and during any tax investigation. These are known as Intelligence Officers. These officers conduct searches on individuals and businesses making use of information both withinand outside of the public domain. HMRC use very sophisticated software known internally as “Connect” to identify those who are operating outside of the tax system. You can read more about the scope of Connect by visiting reading our article. Intelligence Officers have vast resources at their disposal and their sole purpose is to ensure that HMRC are armed with as much information as possible before commencing tax investigation proceedings.
WHAT WILL HAPPEN IF HMRC IDENTIFY ME AS OPERATING IN THE HIDDEN ECONOMY?
HMRC will begin by writing to you formally. They will tell you that they are in receipt of information which suggests that you are operating outside of the tax system. They will generally tell you why they have concerns, but at this stage they will be no more specific than that. The letter will generally be referenced H.E.T (Hidden Economy Team). HMRC will inform you of your rights and tell you that they propose to investigate your tax position.
WHAT SHOULD I DO IF I RECEIVE A LETTER?
Firstly, if you have a case to answer, try not to panic. You are, at this stage subject to civil procedures. HMRC will continue to deal with you in this way, just as long as you are resolved to putting the situation right. Keeping a clear head is vital. Be honest with yourself and most importantly face up to your situation. This is not the time to bury your head in the sand. Be proactive and get some advice and support from a tax investigation specialist, who will deal with HMRC on your behalf.
MAKE A FULL DISCLOSURE
At this point you should have already appointed a tax investigation specialist to act on your behalf. If you have been operating in the hidden economy or have concerns regarding unpaid taxes; now is the time to make a full disclosure. Your disclosure will be treated as prompted by HMRC as opposed to voluntary (unprompted). It is absolutely vital that you seek tax investigation advice from a specialist before enaging in any form of compliance contact with HMRC. This is particularly important when dealing with the disclosures to HMRC’s Hidden Economy Team. You can read more on HMRC disclosures by visiting our dedicated pages.
It is important to act quickly and decisively if you receive a tax investigation letter from HMRC Hidden Economy. It is no time for half measure, half truths or mistakes. Admiral Tax offer a range of tax investigation services covering all types of HMRC compliance work. Call us today on 0330 999 5000 to discuss your tax investigation concerns. We always have the resolution; however grave your situation may appear to be.