HMRC has significantly stepped up its compliance activity in recent months. Being the subject of a compliance check can be a worrying and time-consuming experience, but there are steps you can take to minimise the risk and to help ensure that any such investigation runs as smoothly as possible.
As compliance checks are often conducted at random, they cannot be avoided entirely. However, inconsistencies or delays in producing your returns or making payments may attract HMRC’s attention, which could prompt an investigation.
You should therefore make sure that you always employ the following good practice measures:
- file your tax returns promptly
- make your tax payments on time
- ensure that your figures are accurate
- maintain adequate business records.
We can assist you, by dealing with your record-keeping requirements, filing returns on your behalf and notifying you of any tax payable. Rawlinsons also offer a Tax Investigations Service to protect you from the often extensive costs an investigation like this can incur. Please contact partner Graham Jones for more information.
Dealing with a compliance check
The length and complexity of compliance checks varies, but the more involved cases could cause significant disruption to your business.
If you have been chosen for a compliance check, you will normally be notified by letter. This enquiry notice should tell you whether HMRC would like to examine a certain aspect of your business or conduct a full enquiry.
You will most likely be asked to submit your accounts or any other business records to HMRC for assessment. It is important to keep a record of any correspondence or exchanges with HMRC and to make copies of any documents being inspected, as well as sending any postal correspondence by recorded delivery.
If you are shown to have taken ‘reasonable care’ and to have sound record-keeping systems in place, it is unlikely that you will be penalised. However, deemed ‘carelessness’ will usually attract a penalty of up to 30% of the extra tax due, while fines for deliberate errors could be as much as 70% of the tax due.
Acting in good time
Remember, we are here to help you! We have experience of dealing with HMRC compliance checks, and can liaise with the authorities on your behalf and be present at any meetings. Involving us from an early stage could make all the difference to the outcome of any investigation.
In the pipeline: Single Compliance Process
Following recent consultations, HMRC is set to introduce a new approach to compliance checks relating to income tax and corporation tax, with the aim of improving openness, increasing consistency and reducing the burden on businesses.
The new Single Compliance Process (SCP) will help to reduce the length of time involved in an enquiry, by tailoring the approach to the level of intervention required, and establishing whether the procedure will be desk-based, involve face-to-face visits, or require a more stringent evasion-related approach.