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10 Jan 2022

Under investigation by HMRC for tax issues?

At ABV Solicitors, our fraud solicitor can help. Our knowledge of tax law in the UK is second to none and we have helped clear the names of many businesses that have been under an HMRC investigation.

Here, our fraud solicitor answers common FAQs about this type of investigation.

How likely is an HMRC investigation?

As our fraud solicitor will tell you, an HMRC investigation will typically be triggered if there is an irregularity in the numbers shown on your tax returns; this can be linked to claims for VAT or if your company suffers a large fall in its declared income.

Such rules do not apply to random HMRC tax investigations.

What will happen during the investigation?

This depends on the level of the investigation; full, aspect or random.

During a full investigation, all of your records will be assessed as HMRC will be looking into a significant error in your tax returns, with an underlying intent to evade taxes. During an aspect investigation, HMRC will want to explore part of your tax returns and see certain areas of your paperwork. Aspect investigations are typically linked to human error but this should still be seen as serious.

A random investigation occurs when HMRC chooses a business to investigate at random and they will need to see as much or as little paperwork to meet their quota.

How many years back can HMRC investigate?

Depending on the scope of the investigation, HMRC may want to go back as far as 20 years into your tax history.

Of course, if you have just taken over as the head of a company or you have lost the required tax paperwork to time, this can make these kinds of investigations tricky. But our team can help and will liaise on your behalf with HMRC investigators to ensure that you are not penalised for such common issues.

How long does the process take?

This is a tough one to answer without seeing your case.

Each investigation from HMRC and the duration of it is based on variables such as the depth of the investigation and, of course, how much paperwork is involved.

In simple cases, an investigation can be completed in a matter of weeks, but most investigations take around 6 months, with larger ones taking up to and over a year to complete.

However, our expertise concerning fraud investigations can reduce the amount of time any investigation takes, so if you are at the beginning of an HMRC investigation, contact our team.

How can I avoid another investigation in the future?

Many of our clients worry that if they have been investigated by HMRC once, that they will be placed on some sort of list, which will lead to further investigations when they next submit their taxes.

Luckily, this is not what happens!

If your tax investigation was due to human error (a very common cause) and you filed the taxes yourself, you should seek the services of an accountant to handle your tax returns in the future. That way, if there is another error, it will not be linked to you or your business.

But the best advice we can give is to be clear and honest in all circumstances with HMRC and, if you have any queries about paying your taxes, contact our team for advice.