HMRC Enquiries: Could you be next?
The risk of an HMRC enquiry is very real, any business can be selected. No business is too small or too large for HMRC to challenge they are paying the right amount of tax.
What is an HMRC Enquiry?
HMRC are identifying different sectors and working across all taxes in the UK to maximise tax revenue on an ongoing basis.
HMRC targets businesses for enquiry based on intelligence, analysis and the ability to cross check using the 22 billion lines of data held by Connect.
Connect is HMRC’s software to help HMRC recover unpaid tax more easily. The system uses information from a range of Government and corporate sources to create a profile of a taxpayer’s total income, rather than relying on what the taxpayer declares on their tax return.
When this information differs, the business is flagged up and could be the subject of a further investigation by the taxman.
Who’s next under investigation?
HMRC’s investigations activity is driven by the risks perceived by the taxman.
No matter how good your reputation, no matter that your records are well kept, no matter if you are up to date with submitting your compliance reporting to HMRC, if HMRC are considering your industry or your sector, the spotlight could shine on your business or your personal tax affairs.
Mirandus offer Complimentary Tax Investigation Insurance to clients
No one can prevent a tax investigation from HMRC but you can prepare for it. All Mirandus’ clients, no matter their size, industry or sector, receive complimentary tax investigation insurance as standard when they onboard with us and for the duration of our relationship.
We want to remove your concerns about the costs that arise during an HMRC Investigation and with tax investigation insurance in place, we work with a team of experts to help resolve the investigation efficiently and at no extra accountancy costs to you.
An example of a small business HMRC investigation
A logistics company was selected for an HMRC enquiry where HMRC wished to review the company’s claim for Research & Development (R&D) Tax Credit Relief. HMRC wanted to check the right amount of qualifying expenditure or tax relief was given to the company. We drafted a reply to HMRC and subsequently held a conference call with the HMRC Officer to run through in detail the Research & Development claims. Our assistance with this matter enabled HMRC to close the enquiry with no adjustments and the business was insured through our tax investigation insurance cover against costs incurred of just over £6,000 in accountancy fees.
A personal tax enquiry
Following a property sale, HMRC opened an enquiry into an individual’s Capital Gains Tax position; requesting property valuations, leases and even challenging the transaction, as it involved a business part-owned by a member of the client’s family. The enquiry was relatively short, but entailed much detailed correspondence by the client’s accountant. HMRC accepted there was no additional tax to pay, yet the accounting costs were still £3,500.
