The Low Down On Tax Investigations
HMRC’s number one objective is to maximise revenue and it is achieving this by bringing in an extra £10.3bn a year compared to just five years ago. Tax investigations have contributed to this increase in government funds.
Who Is Being Targeted For Tax Investigations?
During the last financial year, HMRC delivered £28.9bn from compliance activity into businesses large and small. Over recent times, HMRC has changed tactics and now targets the behaviour of businesses by size – large, medium and small – underpinned by gathering more data from external sources.
Individual taxpayers are also approached differently with HMRC’s High Net Worth Unit focused on the wealthiest 8,500 individuals in the UK. Landlords are a particular favourite because of the property transaction information HMRC receives from the Land Registry, supported by voters’ list entries and housing benefit payments.
There will be no let-up in HMRC’s approach as it restructures both the number and location of its offices and IT resources to achieve what it calls ‘data-led compliance ambitions’. Tax enquiries can often result in a stalemate where settlement is difficult to achieve. HMRC offers what is known as alternative dispute resolution (ADR) when an impasse has been reached and an amicable conclusion to an investigation appears out of reach. The jump in applications for ADR in 2016/17 gives an indication as to how tortuous some enquiries can become and how businesses and individuals desperately search for a route to a fair outcome.
To make matters more uncomfortable, the longer investigations take to settle, the higher the professional costs. That is where our tax investigations protection helps. It provides a safety net and ensures all your professional fees are provided for in the event of an enquiry, as that elusive settlement is fought for.
There is little doubt small businesses suffer the most during an enquiry, mainly because they often do not have the same in-house resources available to fight HMRC. Whether a tax investigation, a VAT inspection or PAYE payroll based check, it costs time and money to deal with each one. Sometimes HMRC conducts all three at one time and calls it a ‘cross tax enquiry’. From HMRC’s viewpoint, small businesses make the most mistakes and are the cause of a large proportion of the tax gap. The tax gap is the estimated difference between the amount of tax HMRC actually collects and the amount that in theory it should collect.
Individuals Are Being Targeted Too
HMRC’s compliance effort is not just focused on businesses. Individuals can be selected for investigation too. The most common enquiries focus on are rental income, bank or building society interest declared and capital gains tax declarations. The tax affairs of the wealthy are more complicated. Foreign income and residency and domicile issues tend to arise, alongside capital gains and investment income questions, when HMRC launches an investigation into the rich.
How McDade Roberts Can Protect You
Our tax investigations package offers businesses and individuals protection to ensure that in the event of an HMRC enquiry all our accountancy fees in dealing with the enquiry are provided for.
Our packages offer:
- Up to £75,000 of accountancy fees
- Full representation to HMRC on your behalf including handling all correspondence and interaction, along with attending any HMRC meetings
- Comfort and peace of mind that we can provide a robust defence against HMRC
Take out the worry that it could be you or your business next by taking out a MR tax investigation package with us today.