When The Tax Man Comes

When The Tax Man Comes

By Andrew Mitchell, Tax Partner, Armstrong Watson

In recent years HMRC has become much more aggressive towards the collection of tax and, as a result, we have seen an increase in the number of individuals and businesses being faced with enquiries into their tax affairs and these HMRC enquiries can amount to significant costs to defend the case and seek a fair and pragmatic outcome.

How do fees escalate in a tax enquiry?

A tax enquiry doesn’t just mean a lot of worry and extra work for you, it also means working closely with a tax adviser, as we help the tax inspector understand how the data in your business records has been converted into figures in your accounts.

Not only that, we also have to explain any technical adjustments we have made in your profit and loss account or balance sheet for items such as prepayments and accruals.

From the moment the dreaded enquiry letter arrives, professional fees are incurred:

  • Checking HMRC is entitled to investigate the tax return selected and the enquiry window is still open
  • Ensuring the tax inspector only asks for information and documents relevant to the enquiry year
  • Responding to telephone calls, emails, letters, compliance fact sheets and notices issued by HMRC
  • Providing supporting information from our files relating to when your accounts were drawn up
  • Preparing for and attending face to face meetings with the inspector
  • Debating any obscure or technical tax cases raised during the enquiry
  • Handling any settlement negotiations all the way through to a successful conclusion

Of course these are just the fees for responding to HMRC. We will also be talking to you regularly, answering your questions and keeping you informed of our discussions with the tax inspector.

It is not uncommon for tax inspectors to change during an enquiry too – which can lead to additional fees, assisting the new inspector to get up to speed.

It is easy to see how fees can escalate rapidly, so we believe that subscribing to a Tax Investigations Service, like the one we offer to our clients, is a logical and cost effective measure to take.

If you have any worries or concerns about an HMRC tax enquiry, please get in touch. Contact Andrew Mitchell on 01756 620021 or email andrew.mitchell@armstrongwatson.co.uk