HMRC Compliance Checks are a formal investigation into your tax affairs, that begin with a letter called an ‘Information Notice’.
Receiving one of these will inform you that HMRC is looking deeper into one or several aspects of your tax, and the letter will request more information from you.
If you have been notified of a compliance check we can help. This can include :
- Making sure you do not simply ignore an upcoming compliance check
- Advising you on any underlying reasons you may have financial issues which have flagged you with HMRC
- Preparation for a visit and inspection of your business records by HMRC
What is a Compliance Check by HMRC?
An HMRC compliance check means HM & Revenue are checking to see if you’ve followed the tax rules correctly. These checks are usually triggered automatically by a computer because there are some concerns about the integrity of your company’s tax return.
But this doesn’t mean it’s something serious, it may be a form filled in in correctly or some details that need clarification.
Why has Your Company Received a Compliance Check Letter from HMRC?
If your business has received notification of a tax investigation, HMRC’s Local Compliance team will have taken various factors into account, such as risk, means, industry knowledge and even the results achieved by similar businesses in your area. It’s also likely the inspector will have compiled information about your business from third parties. This can include banks , local authorities and even informants.
What Happens During a Compliance Check?
The compliance check may involve either someone from HMRC visiting you, or involve a request for you to visit them. You’re allowed to have a tax advisor or your accountant with you during the visit, which you may find reassuring.
Essentially , the compliance check is an information gathering process. HMRC want to confirm your accurate position so that compliance can be restored.This will either happen via updating certain details, or it could be via paying a penalty.
Usually, you are sent the results of the compliance check within a period of time. You will have 30 days to pay a tax penalty, and you can always appeal the decision if you disagree with it.
Any threats of legal action should be noted and you must seek professional insolvency advice immediately.
How Far Back Can HMRC Investigate?
The normal time period for the tax to be assessed under a compliance check is 5 years and 10 months after the end of the tax year in question. However, it is usual for compliance checks to be carried out within 12 months of the tax year they relate to.
It is not uncommon for HMRC to ask for information concerning other years when conducting a compliance check. In cases where HMRC believes there is fraudulent or negligent conduct on behalf of the taxpayer, the time limit can be extended by up to 20 years.
Are You Being Investigated? We’re here to help?
If your business has been notified of a forthcoming tax investigation, HMRC will have suspicions something is wrong and will conduct an investigation with the possibility that this will determine that you owe more tax or have breached tax rules.
At Company Debt, we have extensive experience working with HMRC tax problems and helping our clients negotiate tax payment plan settlements. Sadly in some cases the tax owed may mean the business needs rescuing via a pre-pack or even liquidating. Our fully qualified and regulated Insolvency Practitioners can help with this if it becomes necessary.
With the proper preparation and management of any tax investigation, your credibility and trust with HMRC may be improved and any underpaid tax, interest and penalties might be reduced. Contact our team today to discuss your circumstances confidentially.