Have HMRC sent you a letter and opened a compliance check into your tax return?
At Churchill Tax Investigation in London we will manage this compliance check without you having to worry about anything and ensure that it is closed as soon as possible.
What is a Compliance Check
A compliance check by HMRC is usually carried out by HMRC's local compliance division. The majority of compliance checks are initiated because HMRC believes that there is an error with your tax return. Only a very small number of checks are carried out randomly. HMRC only conduct compliance visits if they have identified a tax risk which is a situation where they believe that additional tax may be payable. The best way that they check this is to open an investigation into the business or individual.
A compliance check will meticulously review the previous tax return that you have filed. Tax investigations are usually instigated within 12 months from the date that the tax return was filed with HMRC.
HMRC will usually notify individuals or businesses that they are being investigated through an official letter. This correspondence must clearly state that HMRC is opening a tax investigation or a check of the tax return.
Types of HMRC Compliance Check
Business or individual tax investigations are usually classified in two ways:
Full Check - This will involve HMRC reviewing all company records for a full year along with all associated entries listed on the tax return
Aspect Check - HMRC will undertake a compliance check by reviewing one or two elements of the tax return such as the way in which capital gains tax has been calculated or the method that relief for pension returns has been claimed.
Full Tax Investigation
Depending on the findings of the aspect compliance check, HMRC may decide to carry out a full investigation. If they decide to do this, they must notify you clearly and in writing. If HMRC do transfer to a full investigation, they believe that there are serious problems with the tax affairs of a business or individual.
When facing the prospect of a compliance check, Churchill Tax Investigation in London can advise on the processes and procedures that have to be followed and what to expect. Our team have worked with a range of clients who have received notification that they are to be investigated.
HMRC visit and meetings during a compliance check
It is not unheard of for HMRC to request a visit with the business owner or individual as part of their investigation. We can help you during these meetings, attending with you to make the process a little easier. If you are asked to attend a meeting with HMRC, they do have strong reason to believe that there is something wrong with your tax. It is however, not mandatory to attend one of these meetings. Our strict advice is that a person under a tax investigation should not attend any meetings with HMRC without a tax investigation specialist or agent.
It is extremely important that you prepare properly for these meetings. HMRC will take notes about the information that you provide. There have been many situations where people have not thought about what they have said and they have not provided a full explanation. This can cause serious problems further down the line with the investigation.
Information held by HMRC prior to a Compliance Check
When HMRC investigate, they will closely review all of the records which support the tax returns, but what they request will often include credit card statements and private bank account statements.
If for any reason the tax returns that you submitted are not accurate, it is important to disclose this as early as possible. It is always recommended that you speak to a specialist tax advisor beforehand who specialises in tax investigations. Prompt disclosure of any errors can reduce penalties and make things a little easier.
HMRC going back up to 20 years following a Compliance Check
Where errors are found during the tax investigation, HMRC will also assume that similar errors will have been made in previous year's returns and they may wish to adjust these tax returns too. HMRC can go back 20 years in case of deliberate or fraudulent behaviour. If they do this, you will incur further penalties and interest. This is not to say that HMRC will find errors in every compliance check. Where no errors are discovered, the investigation will be closed. It is therefore essential to make sure that the compliance check is managed by a specialist team of tax investigators who have the expertise to help you in the best way possible.
How our tax investigation consultants can help
- Take control of the compliance check
- Liaise with HMRC
- Meet with HMRC
- Advise you on the best strategy in relation to Compliance Check
- Negotiate with HMRC the best possible settlement for you
- Mitigate tax penalties where possible
- Close tax enquiry as soon as possible
To find out more about our tax investigation services for compliance checks, please contact us today for a free, confidential discussion.