Archive for the ‘Tax investigation’ Category

The risks of a tax investigation

Posted on: February 11th, 2019 by Rachael Ball No Comments

Will HMRC come knocking on your door?

It’s a fact – humans are bad at assessing risk. We’re terrified of things that rarely happen (plane crashes, power station meltdowns) but relatively blasé about things that are statistically more likely to harm us, such as unwashed lettuce.

The likelihood of HMRC swooping to investigate your business’s tax affairs seems to be a particularly difficult risk to quantify. (more…)

HMRC is putting more taxpayers at risk of inquiry as it ramps up its data collection activities – this time by asking lawyers for information

Posted on: May 24th, 2018 by Leighton Reed No Comments

Ordinary taxpayers are becoming increasingly at risk of an inquiry as HMRC ramps up the amount of data it collects and looks for new sources of information for use in its investigations.

Recently, HMRC has been collecting data on taxpayers by submitting information requests to professional services firms, such as lawyers and financial advisers, asking for confidential information on their clients. There was 19% rise in the number of these requests last year to 1,507, up from 1,276 in 2015/16. (more…)

HMRC investigations

Posted on: January 10th, 2018 by Leighton Reed No Comments

What to expect when the Revenue comes knocking.

Anyone whose business comes under the Revenue’s microscope is usually in for a roller-coaster ride.

HMRC has upped its game in recent years when it comes to probing businesses or sole traders who may be suspected of falsely reporting or underpaying tax. (more…)

HMRC warns businesses that it will not compromise when taking legal action – creating more risks for innocent taxpayers

Posted on: November 8th, 2017 by Leighton Reed No Comments

HMRC’s Executive Chairman Edward Troup has warned taxpayers that HMRC will not compromise when taking legal action against them. Taxpayers can therefore expect HMRC to maintain its increasingly hard-nosed attitude in any upcoming investigation. (more…)

Unannounced HMRC visits – important advice

Posted on: July 6th, 2017 by Sarah Curzon No Comments

Each year thousands of UK businesses receive a visit from HMRC. The vast majority are made through official appointments. However, increasing numbers of businesses are finding HMRC are making unannounced visits. If this happens to you, it is very important to know your rights. (more…)

HMRC’s investment in tax investigations continues to yield healthy returns

Posted on: May 23rd, 2016 by Leighton Reed No Comments

Leighton ReedHMRC has seen a strong return on its investment in tax investigations over the last year, with spend on its teams targeting ultra-wealthy individuals, large businesses, SMEs and ‘everyday’ taxpayers yielding very healthy amounts.

HMRC now has a number of specialist units, which focus their investigatory work on particular groups of taxpayers, in order to maximize the recovery of unpaid tax.

Three key teams include the High Net Worth Unit, which focuses on individuals with a net worth of £20 million or more, the Large Business Directorate, which monitors the tax compliance of the UK’s 2,100 most sizeable companies and finally, Local Compliance, which covers ‘everyday’ taxpayers and small to mid-sized firms.


New fees for taxpayers wanting to take HMRC to tribunal

Posted on: April 11th, 2016 by Leighton Reed No Comments

Leighton ReedTaxpayers in dispute with HMRC will now have to pay a fee if they wish to take the Revenue to tribunal. This recent government decision has provoked criticism from lawyers and accountants concerned that the introduction of fees may prevent some from accessing justice over their tax bills.

The proposed fees range from £20 for appeals against fixed tax penalties of £100 or less, to £2,000 for an appeal hearing in the Upper Tribunal or Chancery Court. Although fees at the lower end of this scale are relatively small, fears have been raised that the existence of a fee at all may deter taxpayers from appealing against HMRC and may be increased in the future.

Indeed, when fees for employment tribunals were introduced in 2014, the number of claims fell by 80%.


HMRC challenges on the construction industry scheme prove it is expensive to get it wrong

Posted on: February 12th, 2016 by Leighton Reed No Comments

We have seen a significant increase in the level of HMRC activity in regard to reviewing the construction industry tax scheme.  The result of these reviews is that a number of errors are being identified made by contractors and their operation of the construction industry scheme.  The typical errors are either that:

  • payments are being made without the scheme rules being applied when these apply, or
  • that the tax to be withheld in cases in which the subcontractor does not hold ‘gross status’ is being incorrectly calculated

It is a matter of procedure in these cases to seek to recover tax on the payments made when the construction industry scheme was not being fully complied with.  In addition to this HMRC can seek to charge penalties.


HMRC taskforces collect £109m in unpaid tax

Posted on: January 13th, 2016 by Liz Mounfield No Comments

Newly released statistics reveal that specialist HMRC taskforces have collected £109m in extra tax over the last six months alone. Such impressive results mean that the Revenue is likely to continue to invest money in these units, and increase the number of investigations launched.

Taskforces were set up to target the underpayment of tax across specific industry sectors and geographical areas. They undertake intensive bursts of investigatory and surveillance work- usually lasting around nine months- to identify any causes for concern.

HMRC set up a total of 27 new taskforces between April and October of this year, targeting a range of sectors and regions. Construction workers, taxi drivers and restaurants have found themselves a focus.

HMRC taskforces have an impressive track-record. The very first were established in 2011 and over 100 have been set up since then. Over £400 million has been collected as a result of their efforts. One taskforce alone has generated over 20 arrests.


HMRC intensifies clamp down on underpayment of tax by ‘Mass Affluent’

Posted on: December 9th, 2015 by Liz Mounfield No Comments

HMRC has increased its investment in specialist staff as it intensifies its crackdown on the underpayment of tax by the ‘mass affluent’. The Revenue’s Affluent Unit, which was first set up in 2011, has increased its headcount by 54% over the last two years, and now employs over 300 people.

HMRC’s Affluent Unit was set up to investigate taxpayers on an income of over £150,000 per year or net wealth of over £1million. Many moderately wealthy professionals and businesspeople come under its remit.

The increased manpower means more and more taxpayers from this group are likely to find themselves under scrutiny; the Revenue has significantly enhanced its ability to identify potential targets for investigation.

A number of factors are likely to attract the attention of HMRC’s Affluent Unit. Some common ‘red flags’ include possession of any property or bank accounts offshore, a particularly low rate of income on total assets or the late filing of self- assessment tax returns.