Tax investigations are stressful, intrusive and expensive. The requests for information and documents usually take many hours to compile ready for onward submission to HMRC and then there are all of the follow up questions to respond to, potential meetings with Inspectors to attend and then settlement of the investigation to negotiate!
HMRC – the facts
− HMRC has proudly announced in its most recent Annual Report that the number one objective for this year is to ‘maximise revenues due’ and to collect as much money as possible from investigation related activity.
− A staggering £26.6bn was collected during 2015/16, but the target is even higher for this year at £27bn.
− Nearly half of HMRC’s entire workforce is engaged in pursuing the taxman’s compliance and enforcement agenda. HMRC may have fewer people answering the telephone, but it is increasing the number of officers pursuing money from investigations.
In addition, HMRC has become much better at collecting information and analysing it, which is helping it to deliver more money each year. All of the information used to be stored in 11 separate data warehouses, making it difficult to cross reference and study. However, it has now built an Enterprise Data Hub (EDH) to accommodate all of the information in one place. The EDH can handle all types of data, including picture files, audio files, communications records and email.
Specialist analytical experts then trawl through all the data to identify potential risks, however, a proportion of enquiry cases are selected completely at random.
Investigations can typically last for around 19 months and, even if an investigation is concluded and there is no additional tax to pay, you could still have over £5,000 in professional fees to pay.
Sound scary? Don’t worry!
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