Tax FAQs

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I have received a tax investigation/enquiry letter from HMRC, what should I do?

Seek expert advice if you are unsure or if it is a complicated request for information. Our tax specialists have significant experience, so at this point you may wish to get in touch with us for friendly advice and guidance.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

What triggers a tax investigation?

t may be an omission or irregularity picked up by HMRC. Sometimes it is a random check. You may be in a sector HMRC are targeting. HMRC set up taskforces to target areas that are thought to be at high-risk of tax fraud. These maybe location and/or specific sectors, with property income being perhaps the most common. It may be that your income has risen or lowered dramatically or a claim for expenses has risen or lowered dramatically.Perhaps it is because you have suddenly submitted a supplementary page of your return that hasn’t been completed in the past. HMRC have received information from a third party.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

How long will a tax investigation take?

This all depends on the gravity of the issues. Some enquiries can be settled with letters. More in depth enquiries will require more information to satisfy HMRC to close the enquiry.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

How far back an HMRC go?

HMRC can go back up to 20 years but it is more usual for them to go back 6 years.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

Can I go to prison for tax offences?

They will prosecute in cases of deliberate fraud and particularly in cases where large amounts of tax are concerned. It is possible to go to prison for tax offences but HMRC will usually seek civil penalties.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

What information will I need to provide during my tax investigation?

The information HMRC will ask you to provide will depend on what they are checking. You normally receive an information notice listing all the documentation and information required.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

How long will a tax investigation take?

This all depends on the gravity of the issues. Some enquiries can be settled with letters. More in depth enquiries will require more information to satisfy HMRC to close the enquiry.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

What powers do HMRC have in a tax investigation?

HMRC have extensive powers to request and obtain information from a taxpayer and from third parties. They can issue determinations if there is no co-operation but this is always a last resort.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

What is voluntary disclosure?

A voluntary disclosure is where you the taxpayer comes reports irregularities or omissions to HMRC before HMRC open an enquiry.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

What am I liable for in a tax investigation?

You are liable for any additional tax found to be due together with interest and penalties which will be negotiated on your behalf.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

What penalties are involved in tax investigations?

This depends on whether with omission was voluntarily disclosed and how HMRC deem the omission. Voluntary Disclosure Prompted Disclosure Reasonable care 0% 0% Careless 0-30% 15-30% Deliberate 20-70% 35-70% Deliberate and concealed 30-100% 50-100% The above is HMRC’s guideline for levying penalties but reductions to these can be made.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

Is it in my interests to prepare a disclosure report?

HMRC will require a formal disclosure report for certain enquiries like code of practice 8 or 9. For other enquiries HMRC require full details of the irregularities but they are not required in a formal report.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

Having been investigated will I be more likely to face a tax investigation in the future?

If you have been under investigation by HMRC they will make checks of future returns to ensure the same issues are not reoccurring. This doesn’t necessarily mean they will open an investigation into you specifically because you have been under enquiry previously.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

Can I claim costs of an investigation?

If HMRC open an enquiry and find no additional tax liabilities then you are able to claim back the cost of obtaining accountants, professional advice, or the cost of engaging a firm to deal with the investigation on your behalf. However, if additional tax is found due then you are unable to claim costs.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.

Will I have to pay all additional taxes, penalties and interest now?

No, if you are unable to pay the amount due by the end of the investigation we can arrange with HMRC a payment plan that you can afford.

Call 0203 283 4489 or Email info@panaceatax.co.uk for further help & advice.