Tax investigation? Need help to deal with a tax enquiry?
A letter arrives from HMRC; is it a tax refund, a tax demand or notification of a tax investigation?
If it’s a tax investigation or even just a simple enquiry, we know it’s easy to panic.
You’re bound to have lots of questions rattling around your head…
- Why have they chosen me?
- Did I make a mistake with my figures?
- Do they think they have information on me?
- How will I represent myself in the best way?
From experience we know tax enquiries are rarely as bad as they at first appear. The letters, by their nature, are very formal, quoting tax legislation to comply with the rules.
Questions about tax enquiries
First of all is the letter lawful? Some enquiries can be shut down straight away because the request is already out of date. You then need to decide if HMRC are entitled to receive the information they’re asking for. When that’s agreed you need to watch out for the deadlines given to comply with the requests. Being on time with providing the information requested will help minimise penalties if it turns out you have undeclared tax liabilities.
How long will a tax enquiry last?
The short answer is this; it depends on the type of queries raised and where the responses lead. Some enquiries can be sorted out very quickly with a quick call from us. For example HMRC think you have been receiving child benefit which you need to pay back because you’re a higher rate taxpayer. In reality they have your former address and it’s actually your tenant who’s claimed child benefit. A quick phone call to HMRC will sort out the mistake and the enquiry will be promptly closed.
If HMRC enquire into your VAT returns or business accounts however, your initial responses may lead to supplementary questions which mean that the enquiry lasts for months, maybe even years.
What should I do when I receive a tax enquiry notification?
Our advice is not to contact HMRC directly yourself. The officers at HMRC are highly trained in questioning techniques, which could be detrimental to you. HMRC’s focus is on increasing revenues, not helping you to close the enquiry quickly.
We recommend you speak to your accountant who will provide HMRC with clear and concise responses to their queries in a timely manner, provided they are satisfied that HMRC’s requests are justified.
If you have to contact HMRC, be polite and courteous to the person dealing with your case – after all they will be the one ultimately making decisions on how your enquiry proceeds.
What’s the next step?
When we deal with enquiries, our first step is to carefully review the initial letter and attempt to establish the reason that particular return has been chosen.
We will always seek to speak to the officer dealing with the case to see what information they are prepared to divulge, so that we can ensure our response will be appropriate.
You might like to read our blog Do You Need Help With a Revenue Enquiry.
HMRC tax enquiries can be selected randomly. In most cases HMRC will either have information that does not tally with the tax return submitted, or their internal risk assessment has indicated there are likely discrepancies in the figures submitted.
If you have an open tax enquiry and you’re not represented or dissatisfied with your current accountant, why not reach out to our experienced team of tax advisors to help you deal with HMRC’s investigators, by contacting Jan Friend by email or on 01634 731390.