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Facing a tax enquiry? Why you need to take charge

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Thursday September 29, 2011 at 9:30am
There seems to be a never ending stream of initiatives from HMRC relating to how they handle tax enquiries where (rightly or wrongly) they consider that something needs explaining. Now HMRC’s procedures are being streamlined with the aim of reducing the time an enquiry takes.

Specifically there will now be 4 levels of enquiry under the Single Compliance Process (SCP). At what they call level 1 they are reducing the time taken to just 1.5 days. That’s for very simple enquiries where no face to face meeting is required. At the top end, the most demanding cases such as those indicating tax evasion characteristics or those highly complex in nature they are suggesting 8 days will be required.

Clearly this is a resource driven initiative, being sold to us on the basis that it will reduce the time, costs and hassle experienced by business owners and accountants.

If you are ever contacted by HMRC about a tax enquiry we suggest you get the help of your accountant, and fast. Our approach to HMRC enquiries is to take charge and prevent things like the following from taking place:

  1. HMRC unfairly seeks to obtain agreement to additional taxable profits arising, by encouraging you to settle because you want HMRC to make a speedy exit. We will not allow HMRC to rush things along if we consider it to be detrimental to you. 
  2. HMRC use the new process but wrongly identify what they consider to be risk areas – perhaps as a result of only a superficial consideration of what they regard as facts but which in reality are nothing of the sort. That may well be derived from a check-list review which will generally only provide a very basic understanding of how your business operates.  
  3. HMRC attempts to apply a higher level to the enquiry than we consider is justified.  
  4. HMRC use the new 4 levels approach to insist on a meeting with you whereas we consider that all can be settled without that.  
  5. A tax enquiry becomes drawn-out and HMRC seemingly refuses to apply this initiative when it is adopted nationwide (planned to be from January 2012).

Tax enquiries are never pleasant, even when you’ve nothing to hide or fear. Taking control of the situation, and getting expert advice, will make the best of a bad situation.

Andy Parker
Chartered Accountant Birmingham

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Parker Chartered Accountants and Financial Advisors is the trading name for Parker Business Development Ltd (Registered No. 4116664), Parker Tax and Trust Ltd (Registered No. 06950353) and Parker Financial Planning LLP (Registered No. OC347027). Parker Financial Planning LLP is authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales – registered office contact details here