HMRC has formal powers to enquire into an individual’s tax return within 12 months of receiving it. When HMRC launches an enquiry, it unleashes a complex process that needs to be handled correctly from day one.
If you find yourself the focus of such an enquiry, you would be well advised to get professional help immediately. Taking a wrong turn early on will make things far trickier further down the line.
Partnerships and LLPs fall under different legislation, so are not covered here.
Dealing with HMRC’s procedures
The first thing you will know about an enquiry is receiving a letter in the post from HMRC. The letter informs you that HMRC has started an enquiry into your tax return. If you file your returns yourself, the letter details what HMRC requires you to do and what information you need to supply to them.
People often prefer to get help from an independent expert, so this is usually where we come in. If you have a representative or tax agent and they filed your return, HMRC sends them a copy of the letter, additionally explaining the legislation being used to open the enquiry.
Reason behind the enquiry
Most enquiries start because HMRC holds information that suggests that not all the income or gains were reported or there is a high risk that the return is incorrect for some reason. The enquiry can be into certain aspects or the whole tax return. For example, it might concern an offshore bank account, holiday home, company car or even medical insurance – in reality, the list is endless.
HMRC is required to adopt a neutral approach, although this can be difficult, admittedly. At Moore Kingston Smith, we have seen every possible kind of enquiry and are adept at managing the situation with equanimity.
Even in cases where there is a genuinely innocent mistake, it’s essential to get professional help. We have seen instances where the individual has made things far worse by not responding correctly to HMRC’s enquiry letter. Blameless error aside, there is a whole sliding scale of gravity of enquiry, and we can advise on every aspect from factual evidence to personal behaviour.
Different kinds of enquiry
HMRC is a vast organisation. It has different sections or offices staffed with highly trained experts to deal with a whole range of enquiries. Our team at Moore Kingston Smith can often tell with one glance at the letter the general steer of HMRC’s enquiry. For example, if the letter is from their Fraud Investigation Service, this tells us immediately that HMRC considers the enquiry to be especially problematic. Read more here.
Rarely are we asked for help on an enquiry we have never seen before. We have decades of experience, so we know how HMRC operates. We are used to digging down into the tiny obscure details, asking the right questions and bringing each case to a successful conclusion.
How we can help
The key to success when handling an enquiry is to get the strategy right from day one. We can take on this burden for you. We liaise with HMRC as they gather, review and analyse information, so that you don’t have to. We identify how to complete each stage of the enquiry because we understand what is fundamental to achieving progress, irrespective of HMRC’s final conclusion.