I came across a good article this morning in The Daily Telegraph which took an in-depth look at the clampdown HM Revenue & Customs (HMRC) is taking on tax avoiders.
HMRC argues that an estimated £35billion a year of tax is lost, and it is keen to get it back. This means not only targeting the various tax avoidance schemes you may have read about – due to their popularity by some celebrities – but also taking broader action by pursuing ordinary taxpayers.
This increase in inquiries is no surprise really, given the many measures currently in place, or proposed to come into place – the latest being the proposal to allow HMRC to access, and collect money, from taxpayers’ bank accounts without a court order.
So what do you do if you are faced with an HMRC inquiry? Well, if they are arguing you owe more tax than you paid, write to them immediately. Only provide the documents they ask for – do not just hand over everything, as this could give them an advantage.
If they still believe their tax bill is correct, your next step is to book a tribunal where an independent tax judge will hear your case. However you will face a very long wait to go to tribunal as the number of those requesting a tribunal is on the increase. Another option is to contact the independent Adjudicator’s Office, which arbitrates complaints about HMRC.
Regardless of what action you take, any investigation from HMRC, whether it is an inquiry into your tax return or a full-blown investigation, is stressful and expensive, which is why it is vital to avoid. This is where accountants come in. Their expert understanding and knowledge of both HMRC and tax can help businesses stay on HMRC’s good side. We have seen clients who haven’t had an accountant, come to us with thousands of pounds worth of penalties from HMRC that would have easily been avoided if they had sought out professional advice from the start.
You can read the article in full here.