There really is no way of knowing exactly how long an enquiry by HMRC will take. The length of a tax investigation depends on the size and complexity of the case. Remember you need professional advice from a tax investigation expert who will know what HMRC want and how to present it to them. Never ever deal directly with HMRC during your tax investigation.
HMRC can request records and run a tax investigation for the past 20 years, and this is just one reason it is so important to keep proper and accurate records. Records are not always available so If you don’t have the records to back up any claims, HMRC may make incorrect assessments for additional tax they claim is owed. If you thought “Oh it was such a long time ago, I’ve got away with it now” then you may find yourself very much mistaken. Don’t leave it to chance; get expert, confidential tax investigation advice and sleep soundly.
In serious tax investigation cases HMRC can launch a criminal prosecution over tax evasion and criminal prosecution is unlikely to happen if you are upfront and honest about any tax irregularities you may have during tax investigations. If you continue to lie and cover up the truth during tax investigations then HMRC may go full throttle with a criminal prosecution. Get a professional tax investigations expert who will do everything to ensure HMRC do not launch a criminal prosecution into your tax affairs. To avoid criminal prosecution during tax investigations speak to a professional tax expert!
You should consult an experienced tax investigation expert who knows how to approach HMRC and negotiate in such a way that a tax investigation penalty and interest, which can be as much as 200% of the tax underpaid, will be lower and you avoid tax prosecution. Do not try to lower your HMRC tax investigation penalty on your own; use a tax investigation professional. Remember, under the Proceeds of Crime Act 2002 tax evasion is classed a criminal act and no matter if the sum involved is £1 or £1 million then it is possible to lose everything, including your home.
It’s a situation that most people dread – HMRC have opened an investigation into your finances. However, it’s not the end of the world; there are a number of different things that you can do to make the process run a lot smoother.
1) Try to stay calm You are being investigated, not prosecuted. Even if HMRC find something amiss, a custodial sentence is very unlikely.
2) Get expert advice As soon as you receive a letter from HMRC informing you of an investigation, it is imperative that you appoint a professional tax investigation specialist. Our team consists of ex-Inland Revenue tax
3) Discretion is key Your tax affairs should be private. If you are receiving tax advice from experts, these are the only people that you should be discussing your affairs with. Your mates down the pub are not going to able to provide you with expert advice that such a delicate situation requires. If the investigation ends in a settlement, again, keep it to yourself. Boastfulness can lead to more problems than it’s worth; you never know who’s listening and the last thing you want is your case being re-opened!
4) Honesty is the best policy Always tell the truth. Lying to HMRC will do you no favours in the long run.
5) Never underestimate the Taxman Never assume that the Taxman has missed, or is unaware of, anything. HMRC have an incredible amount of resources available, they can uncover any details at any time.
6) By failing to prepare, you are preparing to fail Make sure you are prepared for any meetings and any questions.
7) Don’t tamper with evidence HMRC can go back as far as 20 years if they feel the situation warrants that level of scrutiny, so hiding or destroying evidence may lead to your case being treated even more seriously. If you cannot present the appropriate paperwork, they may assume that you are trying to hide something.
8) Explain the whole situation Be thorough. Don’t leave any stones unturned. In serious cases, misleading or false statements could lead to prosecution.
HMRC will only notify the taxpayer who is under tax investigation. They will not send a letter to your boss or your neighbour or your second cousin twice removed. However, if you are found guilty of tax evasion, under rules from 2018, HMRC may ‘name and shame’ taxpayers who have evaded more than £25,000. Appoint an experienced tax investigation expert who will negotiate with HMRC and make sure you suffer no more degradation in your tax investigation and no public humiliation by being ‘named and shamed’. It is your only chance.
If you want to report tax evasion or tax fraud, you have to report tax evasion to HMRC’s tax evasion department. You cannot report anyone you suspect of committing a tax evasion offence to us. To report someone you suspect of tax evasion to HMRC go to www.hmrc.gov.uk or ring the HMRC Tax Evasion Hotline: 0800 788 887 We help those under tax evasion investigation, not the other way around.
The most likely reason HMRC will run tax return tax investigations is that they have information which leads them to believe that your tax return is not correct. HM Revenue and Customs (HMRC) can launch tax investigations into tax returns on a random basis to check that tax returns are correct. However, random tax return tax investigations do not happen very often. If you do find yourself under tax investigation you should speak to an expert in tax investigations immediately.
VAT inspections may be random but also occur due to information received which may indicate there is something wrong with your VAT records, instigating a VAT Investigation from an inspector from HMRC. HMRC carry out Value Added Tax (VAT) inspections to make sure that you are paying the correct amount of VAT. This can trigger a VAT Investigation. You might also face a VAT inspection if a company associated with you is under VAT Investigation and has been found to have irregularities in their records or tax returns. HMRC may send you their VAT investigation queries in writing or in the form of a short VAT Investigation questionnaire instead.
HMRC Tax Investigations Inspectors are told and trained to invite you to attend an HMRC interview with them, as this is their best chance to trip you up. There is no legal obligation for you to attend a tax investigations meeting, apart from in two specific types of tax investigations; Code of Practice 9 and Section 144 Tax investigations. We do not advocate meetings between our tax investigations clients and HMRC inspectors. Get professional help to arrange these meetings for you.
We have answered a number of questions about the process below. HMRC wants to investigate my affairs. Does that mean I have done something wrong? Not necessarily, HMRC often checks a number of tax returns at random. This is considered to be a routine enquiry.
Typically, HMRC has 12 months from the date it receives your tax return to inform you that they are starting an enquiry. Late or amended returns, or those with deliberately misleading information, could carry other deadlines.
The tax office will inform you that they are starting an enquiry into your affairs and whether they are analysing the whole of your tax return, specific areas, just one element or a claim made outside of the tax return.
Not at all; you have the right to representation, and this is where a professional tax advisor comes in. They will fully understand everything contained within the letter and will be able to explain and provide advice on the most complex areas of tax investigations in a clear and concise manner. All you then need to do is complete the 64-8 form to confirm that they have permission to speak to HMRC about your affairs. It’s as easy as that.
In normal cases you will be given 30 days to provide the supporting information, but you can request an extension if this is unreasonable. Unless HMRC decides to conduct an extensive investigation into your tax affairs, this will likely be the end of the matter.
Most routine enquiries are conducted by post and in this instance, you are not under any obligation to meet with HMRC. However, if you do choose to meet with an HMRC official you can do so at your home, local tax office or business premises. If you have a professional tax advisor helping you this can be at their offices.
If everything checks out, you’ll receive a ‘closure notice’ informing you that the enquiry has finished, and no changes will be applied to your tax return. Alternatively, you may have paid too much or too little tax. If you’ve paid too much, you’ll receive a repayment. If you’ve paid too little, HMRC will require the outstanding payment within 30 days.
The safest way to deal with a letter from HMRC is to call KinsellaTax on 0800 471 4546 immediately. We can offer you a free consultation and advise you on exactly what you need.