HM Revenue & Customs Investigations

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Did you know that in 2015/16, HM Revenue & Customs (HMRC) secured a record £26.6bn of additional revenue through tax enquiries into businesses and individuals?

Their target for the future is even higher. The fact is that HMRC is becoming more and more focused on investigating those they believe may not be paying the right amount of tax.

What triggers an investigation?

HMRC claims compliance checks are normally triggered when there is an error in the figures submitted on a return. For example if a small company suddenly makes a large claim for VAT, or a business with a large turnover declares a very small amount of tax. However, as always this is not clear-cut and there are some other things that could trigger an investigation, such as:

  • HMRC receives a tip-off
  • You work in a high-risk industry, for example one that routinely takes cash payments
  • You have a large fall in income, increase in costs or there are inconsistencies between different returns
  • You file your returns consistently late
  • Your costs are above the industry norm
  • Your tax returns are inconsistent with your standard of living
  • You are in a sector that HMRC has decided to target

Of course, everyone should be aware that investigations can be completely random as well…

What business taxes does HMRC investigate?

  • Insurance premium tax
  • Landfill tax
  • Capital gains tax
  • Climate change levy
  • Construction industry scheme
  • Corporation tax
  • VAT

This combination means that all taxpayers are now at greater risk of being investigated than ever before. Not a worry for clients of James Magee though!

To robustly defend you against questions by HMRC can be very time consuming, as their questions tend to be very detailed. However, they must be answered, even if no extra tax is payable.

This made us think that our James’ Magee clients needed some extra protection against this kind of enquiry, as it wasn’t covered in normal accountancy fees.

So, from now on all James Magee clients are now protected under our Tax Fee Protection Insurance service as part of their accountancy package.

It covers the additional professional costs of handling tax enquiries and compliance checks and includes support on general legal issues and the complex areas of Employment Law and Health & Safety where can obtain complimentary expert advice on such issues.

Author: Businesswise Accountant

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