HMRC Compliance Check
If you receive a letter from HMRC stating that they are to commence a compliance check, this can often create a moment of panic.
Not only is the HMRC compliance check worrying because the end result may mean a large tax bill, but a company compliance check can seriously distract you from running your business while HMRC review all your company and personal tax affairs.
Our first piece of advice is that you should not second guess why the compliance check has commenced. It could be for a number of reasons, although it is unlikely to be a random enquiry.
It is best to focus your attention on deciding the best way to manage the Compliance check. You should bear in mind that HMRC have the power to obtain relevant documents that help decide what the correct tax liability is; but that is it. They have no special powers that we often here clients talk about, and we ensure that Officers are treated with respect but receive relevant material and no more.
If you believe there may be an issue with your company or personal tax returns, only choose specialists in Compliance Checks to assist. Do not rely on your accountant if they do not have sufficient experience in tax investigations.
Often, mistakes are made at an early stage by accountants; mistakes that cannot later be rectified. Accountants calculate tax and they will always be in place while CTM manages the tax investigation/compliance check. However, they often stray into areas that they should not. If in doubt, call us for some free initial advice. It may be that our services are not required, but it does not hurt, or cost, to find out.
What is a HMRC Compliance Check
A ‘compliance check’ is a review of the accuracy of a submitted company or personal tax return by HMRC.
HMRC compliance check letters come in various forms; always seek professional advice before responding to any HMRC query.
What are HMRC’s powers?
HMRC will often request information and documents to establish whether you’ve underpaid tax and to understand the behaviour that led to your underpayment. Such requests can be onerous and, if you don’t have the knowledge or confidence to challenge HMRC’s requests, you could find yourself subject to what can only be described as a ‘fishing expedition’, where HMRC take advantage of your willingness to cooperate.
These enquiries can be extremely disruptive and stressful for individuals and businesses. Appointing the right advisor to deal with HMRC on your behalf will allow you to continue to focus on developing your business and lead to a quicker resolution of your case.
How long will the compliance check last?
There’s no set limit for how long a compliance check can last, as everyone’s circumstances will vary. Some cases can be dealt with swiftly if managed correctly, while others can spiral out of control and last many years if they haven’t been pro-actively managed.
Under their own charter, HMRC have a duty of care to taxpayers for their enquiries not to become protracted. If you’ve any concerns about the duration of an ongoing enquiry, seek specialist advice.
HMRC compliance check penalties
Once an enquiry has been resolved, HMRC may impose penalties. The level of penalty will depend on the behaviour that led to the inaccuracy in the return and the level of cooperation that you’ve shown throughout the enquiry. We can provide further information relating to penalties that follow the conclusion of an enquiry.
How we can help
When considering appointing specialist representation, advisers and taxpayers should ask themselves these questions:
- Do you feel comfortable dealing with HMRC?
- Are you able to manage and control HMRC, or have you now lost control?
- Do you have up-to-date knowledge of HMRC’s powers?
- Are there any errors in your tax affairs that you should disclose?
- Are you concerned about being publicised as a tax evader?
- Can you restrict the extent of information you provide to HMRC, without adversely affecting the extent of your penalty mitigation?
If you choose to get specialist advice from CTM, we’ll:
- Carry out a comprehensive review of your position to ensure we have a full understanding of the issues and risks you’re facing. That is free of charge.
- We’ll work with your existing adviser/accountant, if you have one, and prepare a strategy going forward to minimise your potential exposure to unnecessary tax, interest and penalties.
- Should a disclosure be necessary, we’ll present this to HMRC to ensure that you’re treated fairly and proportionately.
- Aim to fast track your enquiry to resolution and closure of all issues at minimum cost and disruption to you.
Please get in touch if you have any questions regarding this article – 0345 557 0005