Are you or your business under an HMRC Investigation?
HMRC has been cracking down on unpaid taxes over the last 4-5 years, and these crackdowns are gaining momentum. Before HMRC investigators targeted those individuals in high income, cash, and business who are more likely to use tax avoidance schemes. Now the climate has changed no one is immune, tax officials are targeting everyone from landlords, professionals, individuals who sell on eBay, to those who work from home like sale representatives.
HMRC has set up teams to investigate areas they believe to be high-risk tax fraud, these could be geographical or specific sectors. In recent years it has been property income.
HMRC investigators will not explain what triggered the tax investigation. It could be just a random inquiry or some obvious error or omission HMRC has detected. Sometimes it could be something simple as your tax returns being constantly late or your expense claim was high against your income. Whatever the case is, if you receive a letter of investigation from the HMRC, don’t panic. Some investigations can simply finish with one letter others can go on if HMRC requests more information. These matters are best handled by
tax investigation specialists
If you are under a Tax investigation HMRC can go back 20 years but it is usually 4-6 years. When you receive an HMRC Investigation letter it will detail what information is required depending on what they are investigating. Normally they will require information based on the tax return you have submitted.
HMRC determines what years they can assess and the level of penalties. There are 3 main categories they use, based upon the behavior of the taxpayer:
1 Innocent Omission: If HMRC discovers there was a tax to be assessed, and the taxpayer was wrong without being carless the normal time limit is 4 years from the end of the year, i.e. they will open up 4 tax years.
2 Careless or Negligent: If HMRC finds the taxpayer to be Carless/ Negligent by failing to do what a reasonable prudent man would do. HMRC will look into 6 tax years from the end of the year.
3 Deliberate: If HMRC establishes that the omission was deliberate i.e they had the knowledge and had intended to conceal HMRC will investigate 20 tax years.
The calculation of the penalties and Interest depends on whether failure to disclosure was innocent, carless or deliberate, the penalty can be even higher if there was evidence of an attempt to conceal. The penalties can be anything from 0% – 100%. In certain cases the penalty can be as much as 200%, i.e. where there is foreign income involved.
When HMRC makes an assessment the onus is on the taxpayer to displace the assessment. If the assessment is based on the taxpayer behaviour being carless or deliberate the onus is on HMRC to prove this was the case. At this point it is advisable to consult tax investigation specialists on the matter.
Taking into consideration the above a tax investigation can turn into a lengthy and costly exercise, a pain well worth avoiding. Therefore is it imperative to consult with a tax accountant or tax investigation specialists who have experience of these cases. Appeals can be made against: An assessment, a penalty notice, a decision or a notice under Section 36 FA 2008. This can be a long and complicated process, and if the appeal goes against you the HMRC investigation
or penalties remains to be addressed.
A tax accountant or tax investigation consultants with the correct experience will
- Collect and ensure the correct and precise information is sent to HMRC Investigators.
- Attend to additional information requests.
- Ensure the enquiry is not extended unnecessarily by HMRC.
- Negotiate a final settlement of interest and penalties.
- Negotiate the time period of payment as it is due immediately.
Making sure of the Requirements: Prior to going out for tax advice people need to properly educate themselves about the type of advice they need according to their tax requirements. They need to have the answer to the question: Does the tax work merit engaging general tax compliance advisers or a tax investigation consultants in a specific filed of tax? This is important because there many forms of taxes. People need to establish if they require Personal Tax advice, Corporation Tax advice, Capital Gains Tax advice, Value Added Tax (VAT) or Inheritance Tax (IHT) advice. Within each form of tax further lie various schedules of taxes. Several tax advisers are experts and tax specialist in their particular tax faculty they practice but it is equally important to note that within the tax regime most taxes are inter-related and therefore it is essential to establish the scope of tax advice needed. All of which will need to be returned to the Revenue when you file self-assessment tax return for the tax year.
V P Associates Chartered Tax Advisers can help tax payers file a proper self-assessment tax return to help avoid penalties and hefty fines, the tax advisers at V P Associates keep a close watch on the changing rules and requirements and are therefore equipped with the necessary up to date knowledge to help tax payers every step of the way of filing the self-assessment tax return. Let the tax expert take away the burden and heartache of this annual self-assessment filing exercise and free yourselves to carry on what matters more to your business or otherwise.
About V P Associates: V P Associates, Chartered Tax Advisors & Chartered Certified Accountants East Grinstead, are the first and foremost specialists in taxation matters. Visit their site for a comprehensive list of services including dealing with tax affairs and business accounts preparation for self-employed individuals, be it sole traders or in partnerships, self-assessment tax return preparation, limited company accounts preparation and corporation tax matters, tax planning for individuals and limited companies, VAT, IHT and succession planning and more at: http://vpassociates.com/
Company Name: V P Associates
Phone: 0800 160 1500
City: East Grinstead
County: West Sussex RH19 3BT
Country: United Kingdom