Investigations Case Study
One area that Avanti can help clients is when they are investigated by HMRC, whether this is for Payroll, VAT, Personal or Corporate Tax.
- Client A.
- A Limited Company
- Investigated by HMRC for Personal Tax of a Director and VAT for the company.
- During the investigation it was found that some information had been omitted from earlier tax returns and that a payment had been made to the wrong tax at HMRC.
- This is actually the second time our client has been ‘randomly’ investigated. The first one lasted 4 years – this one, which at the time of writing this article is still ongoing, started on 13th May 2015. Some investigations can last this long! (but don’t worry many just last a few hours!).
- When the client received the original notification that they were going to have an investigation – we called a meeting with the client to discuss the next step, to put their mind at rest about the process, how we will be helping and what involvement they will need to have.
- We then made contact with HMRC to introduce ourselves as the party that will be dealing with the investigation, we arrange a suitable meeting date – held at our offices and check what information is required.
- We prepared the paperwork ready for the investigation.
- We carried out the initial meeting (we do ask clients’ to attend for the first ½ hour to be introduced to the Inspector, to answer a few personal questions) and then the client can continue with their day and we take over.
- Depending on how long it takes, depends on the next stage, but at each point we keep the client informed.
- If you can’t answer a question during an inspection, don’t panic. They will allow time after the meeting to obtain any missing information nor clarify any queries.
- HMRC will write to the client and the agent to confirm what has happened, any result and/or any further queries requiring further work.
So why could you get an investigation?
Unfortunately you cannot totally eliminate the threat of tax investigation. HMRC does occasionally conduct audits at
random, with no conceivable trigger other than your business’ name popping up in the RNG machine.
However, while you cannot guarantee that you will not be investigated, you can certainly take steps to minimise the possibility.
HMRC is famously cagey about the criteria of a tax investigation, but given the number of years they’ve been carried out and the amount of businesses investigated, we can see certain red flags that have triggered a Government audit.
Triggers can include:
- A tip off to HMRC
- Numbers fluctuate by large margins
- Years of unprofitability
- Directors earning less than employees
- Omissions of income
What to do if you get an investigation?
- The first thing is not to panic!
- Be honest and open with your Accountant – they can’t help you if you don’t
- Being open and honest with HMRC – you may get penalties for mistakes, but they can be reduced if you show willing to disclose any potential issues.
- Get your paperwork in order
So how can Avanti help you?
- By having a qualified/experienced agent carrying out your various financial activities such as VAT, Payroll, Bookwork, Yearend Accounts & Tax can eliminate an investigation happening in the first place, or our checking service provides a cost effective option to add peace of mind before submissions to HMRC.
- We offer a fee protection insurance policy, that provides funds to pay for our fees in the event of an investigation.
- Providing advice about the result of an investigation and the next steps to take.
- We become the main contact for the HMRC inspector, allowing the client to continue on with their business. At each stage we keep the client informed and nothing is done without their approval.