In recent years HMRC has become much more aggressive towards the collection of tax, using their connect system that holds information from many government departments as well as external bodies and offshore institutions, and this has led to a greater focus on tax enquiries to collect any tax HMRC perceive as unpaid. As a result, we have seen an increase in the number of individuals and businesses being faced with enquiries into their tax affairs and these HMRC enquiries can amount to significant costs to defend the case and seek a fair and pragmatic outcome.
How do fees escalate in a tax enquiry?
A tax enquiry doesn’t just mean a lot of worry and extra work for you, rummaging around in your garage or loft for historical paperwork. It also means working closely with us, as we help the tax inspector understand how the data in your business records has been converted into figures in your accounts.
Not only that, we also have to explain any technical adjustments we have made in your profit and loss account or balance sheet for items such as prepayments and accruals.
From the moment the dreaded enquiry letter arrives, professional fees are incurred:
Checking HMRC is entitled to investigate the tax return selected and the enquiry window is still open
Ensuring the tax inspector only asks for information and documents relevant to the enquiry year
Responding to telephone calls, emails, letters, compliance fact sheets and notices issued by HMRC
Providing supporting information from our files relating to when your accounts were drawn up
Preparing for and attending face to face meetings with the inspector
Debating any obscure or technical tax cases raised during the enquiry
Handling any settlement negotiations all the way through to a successful conclusion
Of course those are just the fees for responding to HMRC. We will also be talking to you regularly, answering your questions and keeping you informed of our discussions with the tax inspector.
It is not uncommon for tax inspectors to change during an enquiry, which can lead to additional fees, assisting the new inspector to get up to speed.
It is easy to see how fees can escalate rapidly, so we believe that subscribing to our Tax Investigations Service is a logical and cost effective measure to take.
We will be contacting all our clients soon regarding this scheme in the meantime if you have any worries or concerns about a HMRC tax enquiry, please get in touch with a member of our tax team.
Contact one of our specialist tax team on 0808 144 5575.
