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Haines Watts Diss Phone icon 01379 640555

HMRC Investigations – Tax Inspections

Every year thousands of small businesses face investigations into Tax, PAYE and VAT.

To help ease our clients fears, we offer Fee Protection Insurance. This means that any professional fees incurred for our work in assisting with the investigation will be covered. Even if HMRC find nothing owing or out of place, there will still be fees incurred from your accountant.

What can trigger an investigation?

HMRC target particular industries and sectors that are high risk, for example those where multiple cash transactions can be involved. They also use a series of common markers such as tax returns not supporting standard of living, a large fall in income, increase in costs or inconsistencies, they may receive a tip-off or if you are consistently late with returns this could flag up on their system. Sometimes there is no reason for an investigation, you may just appear on their list!

How does it work

HMRC will contact you by writing or contacting you by phone. They will organise to visit you and ask to see the information relating to their area of investigation. An investigation doesn’t necessarily mean you have done something wrong.

You will need to provide all the information they ask for (Accounts, Payroll, VAT and supporting documents) and they will then make a decision, based on their investigation, and confirm if you have underpaid or overpaid any tax or outline any other issues such as fraud.

If you maintain and keep accurate records, send your submissions to HMRC on time and accurately and keep up to date with your tax you may reduce the risk of a tax investigation. Keeping accurate records is good management practice for any business.

What should you do first?

If HMRC contact you with notification of an investigation the first thing you must do is contact your accountant. If you have Fee protection insurance the fees incurred for your accountant to gather information and deal with HMRC on your behalf will be covered.

Fee Protection means you don’t need to panic. Accountants in general will have dealt with many investigations and understand how tax works and will have experience in resolving cases.

It is worth mentioning that having an authorised agent, ie someone who deals with your accounts with HMRC on your behalf, does not transfer any of your legal obligations.

Here are a few tips on dealing with an investigation:

  • Ensure you have Fee Protection Insurance
  • Don’t panic – an investigation doesn’t mean you have done something wrong.
  • Seek Expert Help from someone with experience in dealing with investigations
  • Prepare for meetings – HMRC will have
  • Be Helpful – always answer truthfully and be prepared to back up with supporting documents.
  • Be honest about any mistakes or errors you know have occurred – making a full disclosure is essential.
  • Don’t be afraid to ask – if you don’t understand or need clarification from HMRC then ask.

The best possible advice we can give business owners is to make sure you have Fee Protection Insurance and that it has not expired .

This means you will get the best representation and you won’t need to feel stressed or panic. Even if HMRC find no tax owing, you will still have to pay your expert or advisor for their time and help.

If you are interested in finding out more about Fee Protection Insurance with Haines Watts please give us a call now on 01379 640555. To find out more about Haines Watts in Diss please visit our website here or to view a selection of case studies please click here.

Want to know more? Call us on 01379 640555 or email diss@hwca.com

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