Why was I picked? What sort of investigation is this? What does HMRC know about me? How long will this go on? What is a lifestyle questionnaire? You’ve got questions, let’s get some answers.
How do I find a good specialist advisor? What will this cost? What if I can’t afford a tax advisor? What if I’m skint? You’ve got questions, let’s get some answers.
No – that’s the short answer. Now let’s start with the basics: this is not a meeting, it’s an interview. Former tax inspector Simon Sweetman said: “I have worked with Inspectors who thought it a victory if the taxpayer cried [in the interview].” Read more here.
In order to clobber you for tax, penalties and interest all HMRC needs to do is to show that your outgoings exceed your income. So they send out the questionnaire and / or ask you in the interview a series of questions to assess your outgoings. Read more here.
I’ll be right upfront with you here and say that this is a trick question because HMRC regard carelessness and negligence as the same thing. Read more here.
For most people a discovery is a small thing, for example today I discovered mould at the bottom of my fridge. But for HMRC the term ‘discovery’ is very serious. The thing is this, HMRC have a limited window to launch an investigation and they would dearly like to open up earlier years to have a good dig around in your past, but they can only go this once they have made a discovery.Broadly speaking HMRC needs to have found something that is the result of at the very least “careless” behaviour. Read more here.
Yes. HMRC’s own manuals are a mouse click away: the Enquiry Manual is online here; these are HMRC’s instructions for their own tax investigators, they are made available to the public to prevent excessive FOI requests. Read more here.
Yes. HMRC don’t like using email and don’t normally publish individual email address on their headed paper. But they can be emailed. Read more here.
Yes! In an investigation most of the cards are stacked against you, but here is one that falls in your favour. Read more here.
There is a strong chance that your initial enquiry will drag on for more than a year. This means that you will make one tax return while the investigation is ongoing. Read more here.
To look at your personal records HMRC have to either ‘break’ your business records (make a ‘discovery’ that something was wrong) or show that your personal finances are inconsistent with the business records, so you couldn’t live the way you live on the income you declare. Read more here.
HMRC have a huge amount of power – and they are getting more and more all the time; a tax barrister recently told me, “If the police were getting powers like HMRC are getting there would be people demonstrating in the streets, but because it’s tax they are getting away with it.” But there are chinks in the HMRC armour and ESC A19 is one of those important chinks. Read more here.
I’m re-drafting the latest ebook which is about complaining to HMRC in a tax investigation (what they don’t tell you / what you should know / how to get a good result – it’s that kind of thing). I’m working on the first chapter at the moment and – really – the advice here is: don’t complain until you have made a Data Protection Request (now called a Subject Access Request). Read more here.
Here are the people you can complain to and the likely results. Read more here.
More advisers and their clients should engage in the alternative dispute resolution process. Says tax barrister @keithmgordon writing in Taxation magazine. This article is really intended for tax advisers rather than lay people, however it’s jargon free and – in fact – beautifully written, so go with it. . Read more here.
If you feel that an investigation has gone on for a long time you can apply to the Tax Tribunal and request that HMRC end the investigation. Read more here.
In April 2009 HMRC introduced a new (and tougher) system of penalties. The new regime is complex, this is a solid starting point. Read more here.
After years of protracted negotiation HMRC will offer a settlement figure. You will initially want to accept this – anything to bring the investigation to an end! But you need to make sure that this settlement figure is the full and final figure. Read more here.