What triggers a tax investigation?
HMRC claim that compliance checks are normally 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 then this could also trigger a tax investigation. There are other things that could also lead to an HMRC Investigation. These include a tip-off to HMRC by an ex-business partner, friend or neighbour, your business receives a large amount of cash as payment, or you experience a large drop in income or a dramatic increase in costs.
How many years back can HMRC investigate my accounts?
HMRC will investigate further back the more serious they think a case could be. 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 6 years and investigations into innocent errors can go back up to 4 years.
Can I recoup the costs involved in a tax investigation?
If you are an existing client, we offer tax investigation insurance which would cover professional fees should you be 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 investigation and the volume of paperwork involved. It could take a few months or even up to a year. HMRC could delay your case further by asking for additional information. However, depending on the nature of the case, there are various ways that an experienced tax investigation specialist can reduce the amount of time an investigation takes.
