HMRC TAX ENQUIRIES
Previously Known As Inland Revenue Tax Investigations
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Most Accountants would strongly recommend that any individual or business that is selected for an enquiry by HMRC immediately seeks professional representation. The local Tax Office or Special Compliance Office (SCO) will deal directly with your Accountants whilst they are acting as your adviser, freeing time for you to attend to your regular business affairs and alleviating some of the worry at this difficult time.
To discourage tax evasion and ensure the whole system is operating fairly, HMRC will select some tax returns for enquiry at random. Therefore, if HMRC make enquiries into your Self Assessment tax return it does not mean that they think it is incorrect. When HMRC enquire, they will not tell you whether your tax return was selected at random or as a result of other checks. HMRC say this is because it does not make any difference to how they carry out the enquiry.
Inland Revenue's (HMRC) stated aims for tax enquiries are:-
To ensure you to pay the right amount of tax: no more, no less. They want you to feel confident that other taxpayers are paying what they should in a fair tax system.
In order to do this, enquiries are opened into some tax returns and claims. Further information is collected to help HMRC understand your figures and to check that they are right. This is to make sure you do not pay too much tax or too little. Either way, they will tell you if they find something wrong.
During routine processing of Tax Returns, HMRC carry out a full programme of checks, including comparing your tax return with information from various other sources. If HMRC think that your tax return, or claim, may be incorrect, or if they think something requires fuller explanation, they will start enquiries. If HMRC find any obvious mistakes, for example, in the arithmetic, they may correct them without making enquiries but they will send you details of the corrected figures. If you disagree with the amendment, you can ask for reversal of any changes made within 30 days of the date the correction is issued.
Once HMRC start an enquiry, its only purpose is to ensure the tax return, or claim, is correct. However, the initial request may identify particular areas on which the enquiries will focus.
Please call our office for one to one advice and help.