HMRC Tax Enquiries
HMRC normally has a 12 month window from the date you file your tax return to open an enquiry. This window is extended if you have amended your tax return or it was submitted late.
Each year, HMRC raise thousands of enquiries (sometimes referred to as ‘compliance checks’), to ensure a specific tax return or claim therein is correct or to check that income or capital gains have been reported correctly. Another reason is to discourage evasion and ensure public confidence in the fair operation of the tax system; for this reason, some enquiries are made on a random basis.
Becoming subject to enquiry does not necessarily mean that HMRC has firm evidence that there are serious problems with your tax affairs, and many enquires are closed without amendment. Even so, responding to an enquiry can be very time consuming and stressful for you and your family members or employees, with no recovery of costs available even when the enquiry is closed with no change to the tax return.
HMRC Discovery Assessments
HMRC also have additional powers outside of this enquiry window if they discover information that was unavailable to them during the original enquiry window or can prove that the tax return was carelessly or deliberately inaccurate. These investigations are known as ‘discovery assessments’ and can be raised up to four, six, or twenty years after the end of relevant tax year depending on HMRC’s view of the taxpayer’s culpability in giving rise to the inaccuracy.
Offshore Errors and Non-Compliance
In recent years HMRC have acquired additional powers (in terms of penalties, time limits, and ‘strict liability’ offences) to investigate matters where there is an offshore aspect, however marginal. In these cases, seeking professional assistance is vital as the law enables HMRC to show little sympathy to taxpayers even in cases where most would agree that an innocent mistake was made.
Serious Civil Tax Investigations ‘COP 8’ and ‘COP 9’
Where more serious inaccuracies and/or significant quantities of underpaid tax are suspected, HMRC can employ ‘Code of Practice’ procedures (known as COP8 and COP9 depending on the perceived seriousness of the matter) which are conducted by the Fraud Investigation Service (FIS). These types of investigation are generally more intrusive and require careful management and specialist advice.
Our team of advisors have a great deal of experience in handling all manner of HMRC investigations and we can help manage the process on your behalf, ensuring you have minimal contact with HMRC wherever possible.
In our experience, a taxpayer with professional representation is likely to reach a more favourable enquiry outcome than they would without. The outcome of an enquiry will often depend on knowing your rights as a taxpayer and having the right technical expertise to ensure the correct interpretation of the law is applied to your circumstances.
During this process we will defend your position, assert your statutory rights, and where appropriate, negotiate the best possible settlement for you, including interest, surcharges and penalties, where tax is due as a result.
We always engage constructively and cooperatively with HMRC as this invariably produces the best outcome for our clients.
Depending on the circumstances of each case, we can assist as follows:
- Dealing with tax enquiries & discovery assessments raised into the tax affairs of individuals, partnerships, companies, offshore trusts or onshore trusts;
- Providing specialist advice to accountants, lawyers, agents and other professionals;
- Negotiating tax penalties with a view to achieving maximum mitigation;
- Providing advice in relation to the tax tribunal system, along with representation in the First Tier Tribunal;
- Resolving conflicts with HMRC and advising on the complaints & appeals process if appropriate;
- Preparing reports and submissions for voluntary disclosures to HMRC, including under favourable regimes (‘amnesties’) as and when they become available;
- Preparing disclosure reports as required under Code of Practice 9, in cases where serious tax fraud is suspected;
- Managing tax investigations being conducted under Code of Practice 8, in serious tax avoidance cases.