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.
Alongside this, HMRC have entered into hundreds of agreements (tax information exchange agreements, common reporting standards) with overseas tax authorities which allow the exchange of financial data, income and assets held in order to counter offshore tax evasion.
This data exchange does result in HMRC contacting taxpayers and requesting they make a disclosure or confirm their tax affairs are all in order. Such a contact from HMRC is often referred to as a 'nudge letter' or more formally an offshore income and gains letter.
If a taxpayer receives one of these nudge letters seeking professional assistance is vital. We have assisted many taxpayers in reviewing their offshore income and gains and have a lot of experience in making disclosures using the 'worldwide disclosure facility' ('WDF').
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 require careful management and specialist advice.
Our Services
Our team of advisors have a great deal of experience in handling all manner of HMRC investigations and disclosures. We can help manage the process on your behalf, ensuring all communications with HMRC are in best practice and your interests.
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
- Reviewing offshore income and gains and making disclosures under the worldwide disclosure facility where relevant
- Providing specialist advice to accountants, lawyers, agents and other professionals
- Preparing reports and submissions for voluntary disclosures to HMRC, including under favourable regimes (‘amnesties’) as and when they become available
Please do not hesitate to contact us if you require support with any of these matters.
