What triggers a tax investigation?
HMRC claim that compliance checks are typically triggered when there appears to be an error on your tax return. It could be that if you are a company, there is a large VAT claim. If only a small amount of tax is declared by a business with a very high turnover, this could also trigger a tax investigation. There are other things too:
- HMRC might receive a tip-off from an ex-business partner, friend or neighbour
- Your business might receive a large amount of cash as a payment
- You might experience a significant drop in income or a dramatic increase in costs.
How many years back can HMRC investigate my accounts?
The more serious they think a case could be, the further back HMRC will look. If they suspect deliberate tax evasion, they can investigate as far back as 20 years. More commonly, investigations into careless tax returns can go back six years, and investigations into innocent errors can go back four years.
Can I recoup the costs involved in a tax investigation?
If you are an existing client, we offer tax investigation insurance that would cover professional fees if you are subject to a tax investigation.
How long does a tax investigation take?
Exactly how long a tax investigation will take depends on the scope of HMRC’s case and the volume of paperwork involved. It could take a few months or even up to a year, and HMRC could delay your case further by asking for additional information. However, depending on the nature of the case, there are various ways to reduce the amount of time it takes.
I've received a COP9 letter. What should I do?
If HMRC suspects serious tax fraud, i.e. an individual or business has knowingly underpaid tax or overclaimed reliefs and grants, it may commence a Code of Practice (COP) 9 investigation. A letter is sent to the business or individuals concerned and offers them the chance to submit a full disclosure of their tax affairs under the Contractual Disclosure Facility (CDF). The recipient has 60 days to respond – they can accept or reject the COP9 offer.
Getting your response right is critical as this process can lead to criminal prosecution eventually. If you have received a COP9 letter, we highly recommend seeking specialist support from a tax investigation expert.
Can you help me with a VAT investigation or inspection?
HMRC performs thousands of VAT inspections on businesses all across the UK each year. If HMRC has contacted you regarding an inspection, we're here to provide support throughout the entire process. We can deal with HMRC on your behalf, allowing you to remain focused on your business.
