IR35 Umbrella Company Solution | Chartered Accountant in Essex

The Start of Tax Investigations

The Inspector will notify you by letter if there is to be an enquiry into your tax return. This letter will usually be accompanied by a copy of the HMRC "Code of Practice" booklet. The notification will also include a request for you to submit certain business records. There may be all kinds of reasons why HMRC have selected you for enquiry. They may have received anonymous information, or your accounts may have been significantly different to the industry average. You may even have been selected at random. Whatever the reason, they key to winning will be to get professional advice from the outset.

Consult a professional advisor before submitting any records to the Inspector during tax investigations.

Requests for further information

After the meeting, the Inspector may make requests for further information. Such information may include details and statements of personal bank accounts or those of a spouse or relative, a statement of your assets and liabilities, or even a means test. Always consult your professional advisor before responding to such requests. You have rights and HMRC cannot demand anything they want.

A professional advisor will tell you what information you are obligated to provide during the course of tax investigations. He/She can help you produce any numerical schedules that may be required.

Appealing Against Assessments in Tax Investigations

You may feel the assessment calculated by the Inspector is unfair. A professional advisor will be able to advise you if he believes this to be the case. He will also be able to advise you of the courses of action available to you for appeal.

You may be able to appeal against the assessment itself or even against the conduct of the enquiry by the Inspector. Speak to a professional advisor to find out what your options are.

The Key to Winning in Tax Investigations

• Seek early help from a professional advisor.
• If you are unadvised in an enquiry, seek advice now.
• Consult your advisor before responding to the Inspector.
• Do not meet the Inspector without a professional advisor.
• Delegate the settlement negotiation to your advisor.
• If you are the subject of a tax investigation or tax enquiry, contact us now to speak to our tax consultant.
• Did you know you can protect yourself and your business against the professional costs of defending a tax enquiry, enabling you to hire the best advisor available to defend your case? Find out more about our Professional Fee Protection service.
• Get our free guide How To Avoid And Deal With Tax Investigations

Meeting the Inspector

The Inspector will review thoroughly any records you send, looking for inconsistencies and discrepancies. During the course of tax investigations you will probably be requested to attend a meeting with the Inspector when you will be asked questions about your business affairs, personal life, and lifestyle. Using the records you sent earlier, the Inspector will make thorough preparations for this meeting. There will be questions about any discrepancies the Inspector believes have been found in your records. Make no mistake, the inspector will have prepared thoroughly for this meeting.

The opening meeting will be pivotal to the tax enquiry / tax investigation. The Inspector will prepare detailed minutes of it. Later in the tax enquiry, the Inspector may use as evidence any answers you give in the meeting. You must be well informed and well prepared before attending the opening meeting. Make sure you take advice from a professional advisor before attending a meeting with the Inspector.

Take a professional advisor with you to any meetings with the Inspector. Using a professional advisor will greatly increase your chances of achieving a favourable settlement in tax investigations.

Negotiating a Settlement in Tax Investigations

Eventually the enquiry will reach the point of negotiating a settlement. It is essential you utilise the services of a good professional advisor when the tax enquiry reaches the negotiation stage. The Inspector will have been trained meticulously by the HMRC and will work almost exclusively on tax investigations or tax enquiries. Traders without professional advice often suffer larger assessments during tax investigations as they will be unaware of the negotiating procedures used by the Inspector.

Many unadvised traders give in to the demands of HMRC in the negotiation stage. If you are advised by a professional it may be that your advisor feels the offer proposed by HMRC is unfair and may recommend appealing to the Tax Tribunal (see below). An advisor will have the knowledge and confidence to do this and the mere threat by the advisor of going before the Tax Tribunal may make HMRC reconsider.

Always employ the services of a professional advisor to handle negotiations with the Inspector on your behalf. Without one you may find it difficult to negotiate a favorable settlement in tax investigations.