If you have received an HMRC investigation letter, you must not ignore it. Our HMRC solicitors and barristers specialise in assisting individuals and businesses who have received an HMRC investigation letter, and we are on hand to provide the advice and support you need. We offer pragmatic advice with a commercial focus, and we concentrate on resolving HMRC issues as swiftly and cost-efficiently as possible and minimising any disruption to our client’s business operations.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

What is an HMRC Investigation Letter?

An HMRC investigation letter is a letter sent from HMRC to selected businesses and individuals to check they are paying the right amount of tax.

The HMRC investigation letter should inform you about the type of investigation HMRC intends to carry out, which may be either a ‘full’ enquiry or an ‘aspect’ enquiry.

 

  • Full Enquiry.

HMRC will undertake a full enquiry where it believes there to be a significant risk of error in a tax return, including that it is fundamentally incorrect.

Full enquiries involve HMRC carrying out a thorough examination of the tax return and reviewing the taxpayer’s underlying records and other documentation, including the directors’ financial affairs if the taxpayer is a company.

 

  • Aspect Enquiry.

If the risks identified by HMRC are limited to one or more aspects of the return, an ‘aspect’ enquiry will be opened, at least in the first instance.

If HMRC is undertaking an aspect enquiry, the HMRC investigation letter will explain which aspect or aspects of your tax return it is looking into and set out the documents it wishes to inspect in relation to them.

While aspect enquiries are more limited in scope than full ones, HMRC’s investigations into the issues it has identified will be no less thorough.

 

Why have you received an HMRC Investigation Letter?

 HMRC is at liberty to investigate any taxpayer it chooses. Sometimes, it selects taxpayers at random, but this is rare. HMRC has many tools at its disposal for selecting taxpayers to investigate, including an incredibly powerful computer system that draws information from a wide variety of sources, including bank accounts and land registry records, and flags any issues.

However, being investigated by HMRC does not necessarily mean that you have done anything wrong. There are several potential reasons why you have received an HMRC investigation letter, including:

  • The figures on your tax return appear incorrect.
  • HMRC does not understand your tax return.
  • You work in an industry that HMRC has flagged as being high risk in terms of underpaying tax.
  • Someone has alerted HMRC to potential issues with your tax affairs.
  • You have a history of not filing your tax returns or filing your tax returns late.
  • HMRC has noticed discrepancies between your current tax return and those you have filed previously. For example, if your income fell significantly from one year to the next, HMRC may want to find out why.
  • Your tax returns do not appear to match the norm for comparable businesses operating in your sector.

 

What should you do if you receive an HMRC Investigation Letter?

 Firstly, try not to panic. As we have explained above, there are many reasons why HMRC has sent you an HMRC investigation letter, many of which do not indicate any wrongdoing on your part. Even if you are concerned that you have underpaid tax, you can encourage leniency on HMRC’s part by dealing with the issue promptly and efficiently.

HMRC’s primary focus is on recovering the tax lost to the Treasury. Accordingly, while it has criminal powers, it usually only uses them in exceptional cases, such as those involving systematic tax evasion.

If HMRC’s investigations uncover no anomalies with your tax affairs, it will close its investigation. If it discovers that you have underpaid tax, HMRC will write to you asking that you pay the shortfall within 30 days, possibly with interest.

HMRC may also impose a penalty. However, when deciding whether to do so, HMRC officers will consider several factors, including:

  • Why you have underpaid tax. For example, was your mistake innocent, careless, or deliberate?
  • Did you inform HMRC about your mistake as soon as it came to light?
  • Did you cooperate with HMRC throughout their investigation?

Working with experienced HMRC solicitors and barristers like ours can significantly reduce the risk of HMRC imposing a penalty on any unpaid tax that comes to light following receipt of an HMRC investigation letter. Our team has decades of experience in HMRC’s policies and procedures, and we understand the steps a taxpayer should take to handle the investigation properly and secure the best possible outcome.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.