Since 2010, HM Revenue & Customs’ (HMRC) total revenue from tax has increased year-on-year and in 2016-17 reached £574.9bn, with £28.9bn of this generated as a result of compliance activities.
These figures demonstrate that HMRC has, in recent years, taken a much more steadfast approach to identifying non-compliance and pursuing those responsible, leaving no stone unturned.
It continues to invest large sums of money into its cutting-edge ‘Connect’ software which pinpoints anomalies in data, obtained from a range of sources, and directs HMRC towards people who may not be fulfilling their tax liabilities.
HMRC has been open about its intentions to pursue those who deliberately cheat the system and refuse to pay the sums that they owe, and its latest initiatives and plans to crackdown on tax avoidance and evasion are never far from the headlines.
From landlords and overseas investors, to the gig economy and SME’s and from trusts to online retailers; the truth is, no matter how big your business is, what sector you operate in or how long you’ve been in business, you are not immune.
Even if you have nothing to hide, there are several potential triggers that can raise HMRC’s suspicions and could leave you facing a tax investigation. Here, we identify some of these triggers and how you can reduce the risk of being HMRC’s next target:
1. Are you on time or always late?
2. Inconsistent cash flow
3. Is there something missing?
4. Be accurate, avoid errors
5. Take responsibility for your records
6. Is HMRC targeting your sector?
7. Conform to the norm
8. No rhyme nor reason
In some cases, there may be no rhyme or reason for a tax investigation. Random selection is less common, but still possible all the same. The best thing you can do is make yourself less susceptible to an investigation by managing the other risks discussed in this post.
How can my accountant help?
Preparing and filing your tax return takes time; time that would be better spent on running your business. Not only this, but in the absence of expert knowledge and years of experience it is all too easy to make costly errors. Errors ultimately cause delays and will leave you feeling unnecessarily stressed.
You can easily avoid this by entrusting us with your annual tax return. Our trusted tax advisers will assist you with fulfilling your self-assessment obligations, whilst saving you time and money, helping you to grow your business and eliminating worry along the way.
As your accountant, we are also your best defence if you do find yourself subject to a tax investigation. Investigations can be disruptive, intrusive and expensive. This is why it’s imperative that you take expert advice and guidance when dealing with HMRC. We can:
• Translate the complexities of a tax investigation
• Manage dialogue with HMRC, acting as a barrier between you and the tax man
• Assist with the submission of documentation or information required by HMRC
• Minimise the impact of a tax investigation upon your personal and business life
• Aim to secure an outcome that satisfies both parties
We have years of experience when it comes to dealing with both personal and business tax enquiries and investigations, helping our clients to reach a satisfactory conclusion and leaving them with peace of mind when it comes to their tax affairs.
We also offer a Tax Investigation Fee Protection Service; you can find out more about the service and the protection it provides here. If you’d like to discuss your circumstances in more detail, contact us today.