HMRC are looking to achieve a 2010 spending review target of raising an extra £7bn in tax by 2015. This inevitably means that they are turning their attention to investigations, undertaking detailed reviews, either on a random basis, or because they have reason to believe that the taxpayer has underpaid. Investigations can be intrusive, time-consuming and stressful, and if it is discovered that tax has been underpaid, the taxpayer will have to pay what is due plus any penalty or interest accrued. If you have received notification that your affairs are to be investigated, here are some top tips to help you survive the experience with sanity intact.
• It sounds obvious, but tell the taxman the truth – investigators have huge resources at their disposal, and have the powers to scrutinize numerous aspects of an individual’s affairs, as well as the authority to speak to third parties. The best advice is to disclose everything, and this will be seen far more favourably when the investigating officer is considering any penalties you may have to swallow as part of your settlement.
• Take sound advice – again, common sense, but taking tax tips from colleagues at the golf club will inevitably cost you in the long term. Entrust your affairs to a reputable tax advisor, who understands how HMRC operates and the jargon they use – not only will this free up your time, but emotionally, you’ll feel as if a weight has been lifted.
• Do your homework – prepare well for any meetings and make sure you are able to answer the investigators
questions as failure to do so could be deemed as “lack of co-operation”.
• Play by the rules – if you have underpaid tax, and have reached a settlement, adhere to the payment plan, and above all, don’t let it happen again – HMRC does not take kindly to serial offenders.
Did you know…? You can purchase Tax Investigations insurance, sometimes referred to as Professional Expenses Insurance which will cover all fees in the event of an investigation. Premiums are typically around £75 per annum for SMEs. Speak to the Evans Entwistle office for details.