Enquiry letter from HMRC: what are my options?

If you notice a brown envelope on your desk with a letter inside informing you that you are currently the subject matter of an HMRC tax inquiry. It might be possible that you may be tempted to behave in various ways, which can include running, hiding, falsifying, or ignoring.

Remain strong, take a deep breath and call a skilled/well-qualified accountant. Ignoring documents, correspondence, and information requests at this level can only aggravate the situation. However, with the help of a well-informed accountant taking charge, you might survive a tax inquiry.

What are your options?

1. Stay calm -

   There could be a variety of reasons why you've been selected for an inquiry, and the tax investigators may or may not have the evidence upon which to proceed. Alternatively, it could be that HMRC does not understand something or that your tax returns contain an error.A few tax enquiries are chosen at random.

   While you cannot afford to ignore a tax inquiry, a thoughtful and careful initial answer is vital. Verify that HMRC has the authority to initiate an enquiry in the first place and has done so within the permitted time frames. They typically have one year from the date you file your tax return, but in some instances, the inquiry window may be extended.

2. Make a note -

   If you are handling the tax inquiry independently, and if you haven't already, begin recording all details of your dealings with HMRC, including call timings, who you spoke with, the details of the conversation, and documents requested or sent. Use the recorded delivery. HMRC should also have informed you whether their inquiry will cover the entire of your return or just one particular component of it.

   Depending on the quality of your records, you may need to search down important personnel involved in a given transaction and/or their records, and it would be better if you begin collating your data as soon as you can.

3. Prepare carefully for any HMRC interview -

   You will not and should not necessarily be able to answer all interview questions instantly, as comprehensive preparation is essential. It is highly recommended that you take the help of an advisor who will assist you with this and walk you through some of the meetings key points.

   You'll want to bring your advisor to the meeting. It is far too easy to be intimidated or pressured to say the wrong thing, lose your temper, or be flippant. A skilled advisor will keep you on track and will ensure that the investigator acts reasonably. Verify that someone on your team takes accurate notes and that these are cross-checked against any notes taken on behalf of HMRC.

4. Make no attempt of going alone -

   Its no secret that HMRC is pressing taxpayers hard, aided by increased funds, support, and authority from the Government and its own targets to meet. It would be erroneous to believe that you will never be investigated in such a climate, and the sooner you seek guidance if you know or suspect your tax returns contain problems, the better.

   While prevention is always better than cure, you do not have to face a tax investigation alone, and with the correct guidance and help, it does not have to spell disaster. If you're concerned about a tax investigation, please contact dns immediately.

5. Negotiations -

   If your tax return has errors or discrepancies, HMRC may send you a recommended schedule of adjustments, or a full financial report may be required. Again, refrain from agreeing or signing anything at this stage unless and until you have obtained guidance from an expert.

   HMRC calculations are often subject to interpretation and may not always hold up to close examination. The difference that a well-supported and robust counter proposal or an attack on their assessment can make is significant. Still, flaws in the HMRC method are frequently difficult to detect. Similarly, before you sign any schedule of assets or settlement, your accountant should properly review it.

6. Take expert advice -

   If there is any suspicion of fraud or negligence, or if you believe your tax returns are wrong, get assistance immediately. Choosing the correct accountant for this is important, and your current accountant may not be the greatest choice. You require someone with experience conducting tax investigations, who is experienced in working with HMRC and is tactful.

   Your advisors involvement will often have more weight than dealing with it alone, and they will then be able to assist you with practical and sometimes complex concerns that occur throughout the inquiry.

   While prevention is always better than cure, you do not have to face a tax investigation alone, and with the correct guidance and help, it does not have to prove disastrous. If you're worried about a tax investigation, please contact dns accountants immediately.

If you have any questions or would like specialised assistance on "how to deal with HMRC enquiry letter and help resolving the matter," please contact dns accountants at 03330886686 or e-mail us at enquiry@dnsaccountants.co.uk.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.