Tax Investigation Service
In addition to being stressful and time consuming, the defence of an HMRC investigation can incur significant professional fees, even if there are no errors with your tax position.
Our Tax Investigation Service is an excellent way of protecting against this potential cost and allows our Taxperts to defend your position to HMRC without you having to worry about the cost of us doing so. To give you an idea of what you can expect from a tax investigation, we’ve explained the process below.
Dealing with an investigation
An investigation will usually begin with you receiving a letter. We would always recommend that you seek our advice before responding as it is very easy for a simple response to ‘open a can of worms’, leading the investigation to spiral into other areas which add to the stress, time and cost involved.
Even the most straightforward of investigations can easily cost upwards of £1,000 to defend as HMRC typically ask a number of probing questions when conducting the investigation that will either require multiple items of correspondence or perhaps a meeting with them. Where your tax affairs are complex or a technically challenging point of legislation is being questioned by HMRC, these investigations can take a considerable time to conclude, sometimes more than a year, and can result in substantial professional fees.
For a relatively modest cost, our Tax Investigation Service gives peace of mind that you will have the support available to take care of the process for you and achieve the best result possible without incurring the associated costs.
Who is at risk of investigation?
In short, everyone.
HMRC have incredibly sophisticated data gathering tools which provide them with information to identify individuals and businesses who may have potential tax discrepancies. Their systems connect to a huge number of data sources, such as banks, Land Registry, employers and DVLA, allowing them to build a profile of income and assets, including many located outside the UK. They also use software to analyse the contents of Tax Returns and documents submitted to them which identify any anomalies in what they would expect to receive, all of which can result in an investigation.
HMRC have specialist teams who focus on specific areas of tax and businesses and look for and investigate areas of concern. There are also a small percentage of investigations that are selected completely at random.
The latest estimate of the tax gap, which is the difference between the total amount of tax that should, in theory, be paid and what is actually paid, is £35 billion. Almost 50% of this is estimated by HMRC as coming from errors in Returns or differences of opinion in the legal interpretation of tax legislation. HMRC are, therefore, concentrating their efforts on collecting as much of this as possible.
If you would like to take out our Tax Investigation Service or have any questions regarding it, please contact our Tax Enquiries & Investigations Taxperts.