Image obtained from: http://taxinvestigationessex.co.uk/1October
It’s a scary day when the Tax man comes knocking at your door. Last Friday eight business owners in Northern Ireland were faced with a knock and those terrifying words ‘Tax Investigation”.
As HMRC steps up the activity of its taskforce across the country business owners need to ensure that they are protected and ready. The process of a tax investigation is daunting and lengthy. Each tax enquiry is different but there are certain formal processes to go through:
Although HRMC carry out random enquiries these account for only a small percentage of its investigatory work. If you are selected by HMRC for an investigation, it is likely that they suspect there to be a discrepancy between the tax that you have declared and what you actually owe.
Opening and Record Review
The first thing that will arrive is a letter form HMRC declaring that they wish to review some (or all) of your records. It may well be that there has been an oversight on your part which you can declare early and hopefully reach a settlement. On receipt of the letter from HMRC you need to ensure that you have some advice and protection to ensure that you comply fully at an early stage. At Business First Network our Members have complete peace of mind from this early stage as their membership provides advice, guidance and the attendance of an expert at any meetings with HMRC.
Liability and Settlement
Once HMRC has completed its investigation into your records its officers will present you with a liability figure. This may be quite high. If you disagree with this sum it is up to you to provide evidence to lower the settlement. In this situation, you will need to have sound advice and guidance on how to reduce your liability (if possible) and reach an agreeable settlement with HMRC.