What is a HMRC Tax Compliance Check?
A HMRC Compliance Check is an investigation carried out to ensure that individuals or businesses are paying the correct amount of tax. These checks can cover various taxes, including income tax, corporation tax, VAT and National Insurance.
Several factors can prompt an HMRC Compliance Check, including inconsistencies in tax returns or accounts, significant shifts in income or expenses, third-party information suggesting tax avoidance, and even random selection.
Nazaqat Maqsoom of KANGS Solicitors outlines the position.
Contents
What Can HMRC Check?
In the first instance, HMRC will make contact with the taxpayer to confirm that they are conducting a Compliance Check. This contact can made through the taxpayer’s appointed agent, usually an accountant.
HMRC can look into:
- any taxes paid by the taxpayer'
- accounts and tax calculations,
- Self-Assessment tax returns,
- Company Tax Returns,
- If the taxpayer employs personnel, PAYE records and returns.
What To Expect in a HMRC Tax Compliance Check
When HMRC initiates a Compliance Check, they send a letter to the taxpayer confirming they are conducting a HMRC compliance check. This letter usually includes an Information Notice, outlining the reasons for the compliance check and a request for the information and documentation required.
The taxpayer will be asked to provide the required information and documentation within a specified period.
Should HMRC not be entirely satisfied with the information/documentation provided, it may attend the taxpayer’s premises. If a visit is to be made, HMRC will usually notify in advance the documentation/information required to be available for inspection during the visit.
However, HMRC are entitled to visit premises without notifying the taxpayer. Upon attendance HMRC will be required to produce a Notice to the taxpayer evidencing the basis on which an unannounced visit was authorised; either by an Officer or Tribunal.
HMRC Compliance Check Penalties for Non-Compliance
Not Complying with Information Notice
If the Taxpayer does not comply with HMRC’s Information Notice, it may levy a fine against the taxpayer and impose a daily fine until such time as the information is provided.
Refusing Entry
If the Taxpayer refuses entry to the premises without reasonable excuse, HMRC may levy a fine against the taxpayer and impose a daily fine until such time as entry is granted.
What Happens After The Compliance Check?
HMRC will notify the taxpayer of the results of the check which may involve:
- a repayment if too much tax has been paid, possibly with interest on that amount,
- a request for payment of any tax found to be due within thirty days, probably with interest from the date the tax accrued.
HMRC may impose a penalty which may depend upon:
- the reasons for any underpayment or incorrect claim for repayment,
- any admission of error to HMRC within an acceptable period,
- the extent of co-operation during the check.
How Can We Help?
An HMRC Compliance Check can be a stressful experience because they can often lead to disputes if discrepancies are found. The team at KANGS offers comprehensive support during this critical time, ensuring that your response to HMRC is accurate, timely, and strategically sound.
For over twenty-five years KANGS have specialised in representing individuals and businesses in disputes with HMRC. Our experienced solicitors are dedicated to protecting your rights and ensuring that you are treated fairly throughout the process. Whether you are dealing with allegations of underpayment, penalties, or need to appeal a decision, our skilled solicitors are here to guide you every step of the way.
Our skilled solicitors have a long history of achieving positive outcomes for our clients in a vast array of tax disputes, enquiries, investigations (both criminal and civil) and prosecutions.
In respect of HMRC Compliance Checks, our team is at hand to:
- Provide general advice on requests received from HMRC;
- Collate all the required material and provide the same to HMRC;
- Provide advice on appealing Compliance Checks;
- Act as your official agents throughout the compliance check;
- Attend your premises during any visit by HMRC;
- Provide advice and represent you in respect of determination by HMRC following the Compliance Check.
If you are facing a tax dispute or have been contacted by HMRC for a compliance check, do not navigate this complex process alone, our team would be delighted to assist you. Contact us today using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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