Duration of HMRC investigations up 10% – can you afford not to be protected?

According to statistics released by HMRC, the time it takes for tax investigations to be concluded has risen by almost 10%. In 2016/17, the average time taken to settle a tax investigation was 34 months compared to 31 months in 2015/16. Our Bolton Accountants can offer Tax Investigation Insurance to protect you from HMRC.

The number of tax investigations are increasing each year and with pressure from HM Treasury to reduce the tax gap, HMRC is increasingly seeking to recoup more and more of this unpaid tax.

The heightened number of investigations combined with the increase in the average duration of any investigation is putting significant strains on businesses. If your business is subjected to a HMRC tax investigation you will be best prepared if you have a professional advisor by your side. HMRC investigations can significantly reduce the productivity of a business when management are left to deal with the matter alone, and without tax investigation service, accountancy and tax advisory fees can quickly escalate.

Nicola Roby at CHW Bolton Accountants explains why it is more important than ever to prepare and protect your business against tax investigations.

“An investigation from HMRC can result in a business being exposed to a period of financial and legal uncertainty.  Because of the tax gap, HMRC is increasingly unwilling to drop cases when technical points are disputed even though they sometimes present a weak case.

“HMRC follows a Litigation and Settlement Strategy framework when entering tax disputes, which can make it difficult for their teams to settle disputes for less tax than the full amount initially claimed. HMRC has increased its estimates of the amount of tax underpaid by large businesses to £24.8bn in 2016/17, up from £21.8bn in 2015/16 and they are determined on recovering it.”

The perception is that HMRC sometimes that lacks commercialism, choosing to dig its heels in for an amount they estimated, rather than a settlement which could be handled today. Businesses need to defend themselves against this attitude.

Whilst large corporates may have an in-house team to handle these matters, and a sophisticated and robust financial management system. SMEs on the other hand usually have a smaller resource, potentially leading HMRC to believe they can use their power as investigators due to a lack of awareness and knowledge, turning the whole thing into a fishing expedition as to what they can recover.

It is essential that a business has its advisor beside them when dealing with HMRC, to defend both the business and the line of questioning. We come across business who have been concerned about the costs and therefore have tried to deal with a HMRC investigation themselves. We have seen some ridiculous outcomes which could’ve been mitigated had we been involved.

Our advice is to make sure you have tax investigation service in place to cover the fees of your professional advisor in the case of a HMRC enquiry. For more information about Tax Investigation Service, please contact us via our enquiry form.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

DID YOU FIND THIS USEFUL?

Share it with your network:  

Want more great content?
Sign up to our newsletter

Follow us

Tweets by @CHW-accounting

CHW-Accounting
@chw-accounting


Twitter: chw_accounting

Read enough?

Want to find out how we can help you and your business? Get in touch today and let's have a chat.

WHAT'S THE NEWS?

Grab a biscuit and a brew and read our latest news.

27 November 2019

A brief guide to claiming structures and buildings allowance

by

HMRC recently published new guidance on the structures and buildings allowance (SBA) following changes to the rules. This includes important information about how to claim it.


Read more >

18 November 2019

Leasing a car – how much VAT can you...

by

With a few exceptions, reclaiming VAT paid on the purchase of a car is notoriously difficult. By comparison though, the VAT position for leasing and similar contracts is more relaxed.


Read more >

11 November 2019

HMRC Enquiries – beware if you have a cash...

by

Even in this digital age some businesses remain heavily reliant on cash transactions. HMRC views these as high risk and as a result targets cash businesses with VAT enquiries, using special techniques to justify investigating them.


Read more >

6 November 2019

Did Making Tax Digital for VAT (MTDfV) pass its...

by

The first big deadline for MTDfV is history and whilst there was a fairly high failure rate, it was not as bad as originally feared.


Read more >

29 October 2019

Business property relief (BPR) don’t let it disappear

by

BPR shelters the value of your business from the HMRC. The trouble is though, when you retire from your unincorporated business, the relief disappears immediately. CHW explain how you can preserve it.


Read more >

YOUR CHALLENGES

No matter what your challenge is, we’ve probably dealt with it before.



Need an Accountant?

Get in touch >


Need an Accountant?

Get in touch >


Tax issues?

Find out more >


Tax issues?

Find out more >


Trying to grow your business?

We can help >


Trying to grow your business?

We can help >


Managing cashflow?

We can help >


Managing cashflow?

We can help >


Starting a business?

We can help >


Starting a business?

We can help >


Looking for funding?

Need help with funding? >


Looking for funding?

Need help with funding? >


Buying or selling a business?

We can help >


Buying or selling a business?

We can help >


Adopt the cloud?

We can help >


Adopt the cloud?

We can help >


What else can we do for you?

We can help >


What else can we do for you?

We can help >
CONTACT US

Get in touch, no hard sell, just a brew, a biscuit and a chat.