HMRC are targeted with closing a tax gap of almost £40 billion
They know that small businesses and individuals account for over half of this amount, and this is where they are focusing their efforts, they open investigations on a random or selective basis to see if a taxpayer, like you or your business, has paid the right amount of tax
Whether you are an individual or in business, you can be randomly selected for enquiry by HM Revenue & Customs (HMRC).
HMRC are targeted with closing a tax gap of almost £40 billion – the difference between the tax owed to HMRC and what is actually paid.
They know that small businesses and individuals account for over half of this amount, and this is where they are focusing their efforts.
They open investigations on a random or selective basis to see if a taxpayer, like you or your business, has paid the right amount of tax.
In Chancellor Rachel Reeves’ first Budget in Autumn 2024 she announced a significant move to bolster tax compliance and close the tax gap, with plans for HMRC recruit over 5,000 additional compliance officers. This initiative comes as part of a broader package of reforms unveiled by Chancellor Rachel Reeves, aimed at modernising the UK tax system and improving government efficiency.
This means that moving forward HMRC will have a greater capacity to challenge taxpayers over the completeness and accuracy of their tax returns. This is significantly aided by the ever-increasing amount of information available to HMRC both domestically and as a result of automatic exchange of information with a large number of other tax jurisdictions.
Paul Noble, our Head of Tax Disputes, says:
We have seen an increasing number of enquiries opened in recent months. Some relate to specific areas of interest for HMRC such as domicile, Research and Development Tax Credits and let property, and others purport to be merely random checks of submitted tax returns, but whichever category the enquiry falls into, it can be very time consuming and costly to deal with, particularly if the information sought by HMRC involves events which took place many years ago…
HMRC investigations can be disruptive and intrusive. They can also be a long and costly process, sometimes lasting a year or more.
Whether or not there is any additional tax to pay on completion of the enquiry, there is always a cost associated with handling the investigation and the related arguments presented to HMRC on your behalf as the taxpayer.
We offer a Tax Investigations Fee Protection Service to our clients, which varies in price depending upon circumstances, but for private individuals the cost is generally less than the professional fees for one hour of partner time. If you were to join this, our costs would be met in the event of an investigation, subject to any limits due to the type or nature of the enquiry, helping to shield you from the stress and uncertainty brought about by an HMRC enquiry.
If you would like to find out if you are eligible for this service, please get in touch with your usual Blick Rothenberg contact or alternatively, you can email us at tifps@blickrothenberg.com or use the form below.
