Tax investigations can happen to anyone. Whether you are an individual or in business, you can be randomly chosen by HM Revenue & Customs (HMRC).
HMRC are targeted with closing a £32 billion tax gap – 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.
An additional pressure for the Government is the sizeable deficit created by the economic impact of the Coronavirus pandemic. As a result, they are tackling the tax gap even more aggressively than before. Whilst, as planned, the Taxpayer Protection Taskforce launched by the Government at Budget 2021 to combat fraud in the COVID-19 financial support schemes administered by HMRC is now being wound down, HMRC are not reducing the number of enquiries opened; they are merely moving a proportion of the COVID scheme compliance activity to business-as-usual tax compliance work.
This means that they 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.
Fiona Fernie, our Head of Tax Disputes, says: “We have seen a large number of enquiries opened in recent months. Some relate to specific areas of interest for HMRC such as domicile 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, particularly if the information sought by HMRC involves events which took place many years ago, as is often the case with domicile enquiries. Unfortunately, even those whose claims to be non-domiciled have been accepted by HMRC for many years are not immune to such enquiries.”
Shielding you from the stress and uncertainty created by an HMRC enquiry
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.
Would you like to know more?
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 firstname.lastname@example.org or use the form below.