Personal Tax Return Enquiry
A new client, who worked within the construction industry, approached us as HMRC had opened an enquiry into his tax return asking about several areas and suggesting that large amounts of tax were due. His current accountant had been dealing with the enquiry but he was concerned with the responses being provided, as these appeared to be making the situation worse.
How we helped our client
Following a review of the original tax return, accounts and correspondence with HMRC, EQ contacted the HMRC Inspector dealing with the enquiry to establish a working relationship and find out what his areas of concern were. The enquiry had originally been opened as there was a large discrepancy between the income shown on the tax return and that reported to HMRC on Construction Industry Returns by people paying the client. The enquiry expanded into other areas of the return as the previous accountant had not provided a satisfactory response to the question. The HMRC Inspector was now looking to query every aspect of the return.
EQ agreed to review all entries and report back to the Inspector accordingly. We identified a number of errors resulting in an underpayment of tax; however, we also identified that a number of allowable reliefs had not been claimed. Therefore, we were able to agree with HMRC to include these in the settlement, substantially reducing the amount payable.
Although we had originally been engaged only to deal with the enquiry, the client was very pleased with our service and they agreed to move to us for all compliance work, including accountancy, payroll and tax return preparation. In doing so, we could reassure the HMRC Inspector that going forward all compliance would be dealt with correctly, which greatly helped to mitigate the penalty payable.
For more information or to discuss further, please contact the Tax Enquiries & Investigations Taxperts.