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17 Oct 2022

Whether you run a large business or are a sole trader, few things are more worrying than receiving a letter from HMRC stating that you are going to be investigated for fraud.

This is likely to cause panic in even the most experienced of business people, but don’t worry! With the right help and attitude, the process can be rather straightforward, and you will walk away without any long-term issues.

When you need help with any kind of business fraud, you should contact our fraud solicitor at ABV Solicitors. We have helped thousands of business owners and sole traders with HMRC investigations, so we know how to handle the process and what you need to do to reduce the impact that this will have on you and your business. Great!

With that in mind, what is involved in an HMRC investigation, and what can you expect our fraud solicitor to do to solve the issue? Read on to find out.

What is an HMRC investigation?

In simple terms, an HMRC investigation is when your affairs and finances will be looked into by HMRC; this is usually following an unusual tax return or a tip-off that your business has not been paying taxes.

According to our fraud solicitor, this can also be linked to issues relating to PAYE and VAT returns; this can be particularly unnerving for those who run smaller businesses and do not have an accountant to work with. But if you have hired an accountant to oversee your business finances, when you are contacted by HMRC relating to an investigation, your accountant will need to be informed.

Types of investigation

There are three types of HMRC investigations that a business or sole trader may be subjected to.

The first is a full enquiry; this will involve business records dating back as far as 20 years being looked through.

The second is an aspect enquiry and will usually be focused on one part of your business taxes, such as VAT or a recent tax return.

Finally, there is a random check; this is exactly what it sounds like and is when HMRC simply wants to check whether a random business is holding all of the correct records and information relating to its taxes.

When you receive a letter from HMRC, you will be informed of the type of investigation they are conducting, and you will need legal help with each type to ensure that there are no long-term issues.

What happens during an investigation?

An HMRC team will look through your books and accounts while asking you questions; if you have had an accountant keeping your books for you, they will need to be informed so that they can answer these questions. It is also worth having a legal team to defend you, which is why you should call our team at ABV Solicitors, even if you know you have not done anything wrong.

Preventing investigations in the future

The easiest way to prevent further investigation is to ensure that your books and accounts are kept up to date and that you have an accountant or other financial representative overseeing these areas for you. That way, if there is an issue with a tax return related to your business, you will not directly come under scrutiny.