HMRC tax investigation

How to Survive an HMRC Tax Investigation?

Just the word investigation makes one start sweating. An HMRC tax investigation is stressful for any business. Wait, are you wondering what an HMRC tax investigation is? HMRC has the privilege to check your affairs anytime to ensure you’re paying the perfect measure of tax. Yes, you can be caught by surprise. If your business come across HMRC’s inquiry, you may get a letter or call in which they can demand your records and other things. This may incorporate things like:

  • the tax that you pay
  • your records and tax estimations
  • Self-Assessment tax return for a given year
  • your Company Tax Return
  • PAYE records and returns in case you’re a business
  • VAT returns and records in case you’re VAT-enlisted
  • If you have an accountant, HMRC may reach them rather than you, however, your accountant should be in contact to enlighten you concerning it.


Wondering why your accounts might be investigated? There are many answers to this question so our accountants will keep it brief for you, and tell you why you might be in the list:

Unusual activity in your tax records or accounts could hail you up for an HMRC charge consistency check.


  • Submitting observably erroneous figures on an assessment form – so it truly pays to have an accountant to bring to the table proficient guidance about your records and check over your government forms before you send them.
  • The business you work in being viewed as “high risk”(e.g. in the event that there are a ton of “cash in hand” exchanges)
  • Somebody making HMRC aware of irregular action in your records
  • Observable irregularities between assessment forms (e.g., a major fall in pay starting with one year then onto the next)
  • Often documenting tax forms late
  • Your records not coordinating the business standards
  • You can’t generally maintain a strategic distance from a tax investigation: your records may essentially be chosen indiscriminately for examination, regardless of whether your books are all together and you generally document tax on schedule, so it truly pays to ensure your books are consistently up-to-date.


The tidier your books, the snappier and less excruciating the assessment review will be. Our accountants give you tips on the best way to endure even the most exhaustive HMRC review. Maintain your records in control before you get a tax investigation letter.

  • Keep your records up to date

This cannot be emphasized enough. At the point when your records are up to date, not exclusively would you be able to get on pivotal data rapidly, (for example, regardless of whether clients haven’t paid you on schedule), you can likewise effectively react to any HMRC review enquiries without the pressure of looking for pieces of paper.


  • Record your Self-Assessment and VAT returns on schedule

Don’t get surprised if HMRC ask you to submit your records in case of late submission of tax or VAT returns. So, in order to stay on the good side of HMRC you have to stay ahead of your schedule. What do we learn here? That punctuality is the key!


  • Check your data thoroughly

At the point when it’s an ideal opportunity to document, you should simply check the information, fill in the missing subtleties and afterwards present your Self-Assessment government form or MTD-viable VAT return legitimately to HMRC.


Keeping HMRC out of the picture for a second, your business will profit by clean, modern records. Being all prepared comes in handy especially in accounting! You’ll not exclusively be prepared if HMRC opens an enquiry. You will know how your business is performing on everyday basis.  This will enable you to figure out any issues in your records before they become significant issues.  Also, it will help you with finding possible chances, similar to whether you may have the option to spare some assessment by purchasing new gear sooner.

At times even HMRC catches you by surprise and you just do not know when they might end up at your doorsteps. If you are aware of a blunder you have made then please try to rectify is as soon as possible and if you believe everything is set at your end then still there is no harm in going through the records just to be sure everything is intact. In the event that you are forced to bear an HMRC charge examination, at that point this is what you ought to do:

Keep a calm mind

The underlying response of most entrepreneurs is to be furious or dreadful and need to determine the issue as fast as could reasonably be expected. Be that as it may, you should oppose the compulsion to call HMRC right away. All things being equal, contact your accountant (in the event that they have an insight of duty examinations) or connect with a tax specialist to talk about what you ought to do straight away.

Have a genuine discussion

There’s no point looking for proficient guidance in case you’re not going honestly about any blunders you might know about. At exactly that point will they have the option to inform you on your best course regarding activity given their insight into the nuances of the HMRC tax investigation measure.

Check HMRC is qualified to demand certain data

Check with a master that HMRC is qualified for requesting the documentation it needs to see before reacting to the underlying data demand. On the off chance that you don’t know why HMRC needs certain data, at that point inquire. In the event that it’s not pertinent to your tax return, at that point it ought not to be given.

Comply with HMRC’s time constraints

Time is money. Here it literally applies. HMRC will give frequent deadlines to submit data and your answers. On the off chance the deadline is realistic, you make sure that you meet them. Your presence will influence the decision also in deciding any paneities.

Because of internal pressure, HMRC may not generally set sensible cutoff times. In the event that you can’t give the data mentioned inside the cutoff time, at that point you should contact HMRC right away.

Come clean

You ought to consistently come clean in your dealings with HMRC. HMRC has built up a ‘supercomputer’ called Connect. It processes extensive data about the property, resources, financial balances and substantially more. That implies there’s a decent possibility it knows more than it’s letting on.

With regards to penalties, the contrast between unveiling any issues promptly and attempting to cover or deny blunders can be colossal, so contemplate how you react.

Going to gatherings

It isn’t surprising for HMRC to propose a meeting in the beginning phases of a tax enquiry. Nonetheless, in a standard examination, there is no commitment to join in. All things considered, you should tell HMRC that you won’t go to the meeting. Keep HMRC in loop about your attendance.

On the off chance, if you go ahead with meeting, you have to take precaution. You should approach the examining official for a definite plan of the things they need to cover previously. You have to practice your answers with your lawyer if you are facing inquiry officials.  Also, prepare your answers beforehand. Also, take notes of what you want to say.

Think about the expected penalties

It’s fitting to remember the possible penalties as all that you state from the second you begin comparing with HMRC could affect the result of the investigation.

In an unlikely scenario, you have made a silly mistake and tried everything to make it right, then you may not get a penalty. In this case, you just have to pay your owed tax.  You may be charged a penalty, at that point it’s probably going to be around 15% of the tax due.

If you make a purposeful mistake and haven’t done anything about it to make it then you have to pay fine. You may get a penalty of up to 70% of the sum due.

Make instalments on account

In the event that you do owe tax to HMRC, at that point it may be conceivable to agree. A few counsels are pros with regards to arranging instalment concurrences with HMRC. They could arrive at a ‘Time to Pay’ game plan for your benefit that surrenders you to a year to pay the tax you owe without bringing about additional penalties.

Act now!

An HMRC tax investigation won’t disappear. Participation is the way to diminishing and conceivably eliminating the danger that a tax penalty will come to your direction. It will likewise permit you to finish the investigation as fast as could reasonably be expected so you can focus in on maintaining your business.

So, basically, you don’t have to panic. Even when you caught by surprise. Just don’t lose your cool and and take everything thrown your way very calmly. Finance teaches us one thing which is to be rational. State the facts and figures and that is exactly what you have to do in this case scenario.

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