HMRC Tax Enquiry

If you receive a letter from HMRC who want to look into your tax affairs the most important thing to do is get professional representation.

HMRC Tax Enquiry

If you receive a letter from HMRC who want to look into your tax affairs the most important thing to do is get professional representation.

We can support you during the whole process, managing any communication with them.

Costs to defend yourself could be high, therefore we recommend you protect against any unexpected costs, by taking out Tax Fee Protection Insurance cover.

What is a HMRC Tax Enquiry?

An HMRC tax enquiry is a way to check and authenticate the information provided on tax returns. HMRC sends an enquiry to make sure the details on tax returns are correct and complete. HMRC can select your business deliberately or at random and send you a formal letter or phone call in which they will mention the reason for this enquiry. Some of the most common areas of investigation include: 

  • accounts and tax calculations 
  • your company tax return 
  • self-assessment tax return for a year 
  • VAT returns and records of your company if registered 
  • PAYE related information if you’re an employer 

It can be anything, and you need to prepare yourself for a tax enquiry related to your business. Having no representation might be problematic, and that is where we can help you. 

Business Accounting Professionals at Lawrence Grant can work as liaisons between you and HMRC to manage and process communication between both parties. Our experts will help you understand the procedures involved in an HMRC tax enquiry and provide assistance with your tax affairs. 

What Will HMRC Need From You?

HMRC will ask you to submit almost all your tax-related records of your business for the year of enquiry. But this will also vary depending upon the type of enquiry HMRC is conducting. The most common financial records needed by HMRC include: 

  • VAT records 
  • Payroll records 
  • Bank statements of the business 
  • Cheque Books 
  • Payslips 
  • Job quotes 
  • Expense receipts and purchase invoices 
  • Sales invoices 
  • Credit card statements 

What Triggers a Tax Enquiry?

Any unusual activity can easily flag you up for an HMRC tax enquiry. It could be a wrongly filed tax return. The Central Risk Team of HMRC triggers the most common checks. The team uses advanced technology to identify unusual trends in businesses’ finances. Primarily, an enquiry is sent as a result of submitting wrong figures on a tax return. We recommend hiring experts to check over your tax returns before sending them to HMRC. 

There are several other triggers of an HMRC tax enquiry. If the industry you are working in is being seen as high risk, i.e. if there are a lot of physical cash transactions, an enquiry might be triggered. Moreover, someone can also alert the HMRC about malicious activity and report you. There are high chances that HMRC will be sending you a formal tax enquiry if you are frequently filing late tax returns. Lastly, if your accounts are not according to industry norms, HMRC might serve you with an enquiry notice. 

These triggers don’t go unnoticed by HMRC, and you need to equip yourself to straighten these issues. We understand that an enquiry can be highly intimidating, but our team at Lawrence Grant is here to deal with tax enquiries and keep your financial stability intact. 

Frequently Asked Questions 

How long will a tax enquiry take?

The length of the enquiry or investigation depends on the case. The duration can range from one letter to several months, and in many cases, it can go on for several years. So, there is no definitive answer to this, but it entirely varies from case to case. If you want to speed up the process, the best way is to appoint a specialist. 

What is the best thing to do if I am due to be investigated in an HMRC enquiry?

The best thing you can do is cooperate with HMRC and appoint a specialist to help you in this process. Specialists like us can guide you through the entire process and make it far less intimidating for you. We provide a comprehensive service to cater to your tax enquiry needs. We will review your tax affairs to ensure you completely understand the issue and work as a liaison between you and HMRC. 

How far back can HMRC go?

HMRC can go as far back in time as they want, but the duration entirely depends on the severity of the case. If the enquiry is regarding minor errors, they might go as far back as four years, but for issues like fraud and malpractice, they can look into 20 years of your tax records. So, this clearly depends on the type of issue they are dealing with.

What are some of the main stages of an enquiry or check?

The stages of an enquiry include: 

  1. You will receive an opening letter from HMRC.
  2. Further correspondence will be done to clarify matters. 
  3. You will be requested to meet with the team of HMRC to have a clear understanding of the matter.
  4. You will put forward your concerns, and they will put forward theirs.
  5. The enquiry will be closed after reaching a decision or resolution.

What is HMRC trying to find out? 

The inquiry may be of two types. The first can be a full enquiry that checks the tax returns as a whole. The second can be as an aspect enquiry. This type of enquiry checks the information on one or more points. 

Got a tax question? Let's have a chat

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