The Report

The report, when adopted by the taxpayer, is his disclosure of both the direct and indirect tax irregularities there have been in his tax affairs, so its form is a matter for him to decide.

In practical terms, if the report is to be acceptable to Special Civil Investigations (SCI) with a minimum amount of further enquiry and explanation, it will be to the client’s advantage to accept the terms of reference for the report as suggested by the investigator at the opening interview. In essence, the better the report, the more likelihood of the investigation being settled quickly – and on the basis of the disclosures made in the report.

 

Whilst there is no standard format for the report, an outline for the areas to be covered is given by Code of Practice 9 (2005) which states that it should provide:-

 

    • A brief history of the business

 

    • Details of the nature of the irregularities and how they arose

 

    • Details of the extent of the irregularities

 

    • A summary of the steps taken to verify the amounts of the irregularities

 

    • Details of the assumptions made and the supporting documentation

 

    • A schedule of the irregularities for each tax for each period

 

 

 

 

Whatever the form of the report, the onus will be on the adviser to plan and record his work. An ‘audit trail’ is essential to be able to deal successfully with HMRC’s subsequent queries.

 

Below is a list of possible matters to consider when preparing a report. The list is not exhaustive, neither will it be relevant in all cases:-

 

    • Unrecorded sales and purchases

 

    • False invoicing

 

    • Deferred sales

 

    • Purchase rebates and discounts not recorded

 

    • Transfer pricing issues

 

    • Valuation of stock and work in progress

 

    • Deductibility of provisions

 

    • Capital v revenue items

 

    • Personal expenses claimed through the business

 

    • Non-existent employees

 

    • PAYE/NIC and benefits issues

 

    • Use of offshore companies and/or trusts

 

    • residency issues

 

    • Confirmation and reconciliation of all bank/building society accounts

 

 

If you are the subject of a Serious Fraud Investigation then you NEED professional help. Call KinsellaTax today on 0800 471 4546 where a team of dedicated specialists are waiting to take your call

More Information

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