HMRC Compliance checks, as they are called, are essentially a process to encourage taxpayers to follow the law and pay the Exchequer its legal dues.
Compliance checks occasionally happen randomly but are more often the result of HMRC noticing an irregularity, or becoming suspicious. If you find yourself under investigation in this way, you should be aware that HMRC’s intention is not to wind up your company unless they feel compelled to do. Their goal is to recoup the taxes owed to them, and your willingness to facilitate this process will go a long way to helping your case.
Here at Company Debt, we’re some of the UK’s most experienced HMRC mediators, with decades of experience understanding how they think, and what their expectations are during investigations. Here are some of our tips on how to weather the process:
Obvious enough, but worth repeating anyway. Panicking is not going to help your cause in any way, so your best bet is to remain as calm and rational as possible. If you feel out of your depth, now is the time to take professional advice.
Communicate With HMRC Within Their Required Timeframes
Any communication from HMRC such as a Compliance Check letter is going to mention their time scale, and when they expect you to contact them by. No matter how stressed you may be, you need to respect their timeframe to the minute, because these letters are intended to spur people into action. If they don’t see action, their measures will only become more urgent.
Understand Your situation
The better informed you are, the better your chances of success with HMRC. Over the years, we’ve fielded numerous calls from people who have received the most serious threatening letters from HMRC without, apparently, recognising the urgency and intent these letters imply. In these instances, lawyers and accountants (unless they’re specialists in this area) may not be the best sources of information since their negotiations with HMRC may be infrequent. Your situation depends on you knowing your liability, and HMRC’s powers to impose compliance.
Negotiate a Time to Pay Agreement or Make a Payment on Account
In certain situations, HMRC is willing to consider time to pay agreements, which lay out clearly defined plans for repayment of debts. Demonstrating a willingness to pay HMRC what you owe them can show them good faith, and give you time to get your company finances in order.
Complete Honesty with HMRC, at all times
Lying to HMRC, falsifying information, destroying evidence, or attempting to conceal any aspect of your tax affairs are the very worst things you can do. Backed by a powerful supercomputer, HMRC’s ability to sniff out inconsistencies is growing ever more powerful. Adopting a 100% honesty policy with HMRC is going to give you the best chance of surviving an investigation.
Author: Mike Smith