Investigations by the Inland Revenue (IR) is a serious and stressful matter. Major enquiries can seriously disrupt your business and profitability, whilst a personal tax investigation can be lengthy, detailed and intrusive. The deliberate concealment of information could result in a fine or even prison. Most tax investigations begin if the IR suspects that some aspect of your tax return or business accounts is wrong. Investigation can also be triggered following a tip off (malicious or otherwise), or when there are anomalies in your tax return.
Random Tax Investigations
The IR also randomly selects tax returns each year. They will write to you to let you know that your affairs are being investigated although it will not normally give the reason behind its decision to launch an enquiry. Under the self-assessment rules, they must start the enquiry within 12 months of the last filing date, but there is no requirement for an investigation to end within a fixed period of time. Some enquiries can last more than two years and this can obviously have huge business and personal consequences. Tax affairs are confidential and information will only be disclosed to organisations or individuals you agree it may be given to, such as FWD. The IR may ask former employers, suppliers, customers or colleagues for information relating to its investigation.
Most investigations are handled by local tax inspectors. They know what to look for and are well versed in the excuses given by taxpayers who have underpaid and mis-reported. The tax inspector is not required to give reasons for the enquiries it makes. If the problem appears to be a simple one of omission, it can ask taxpayers to answer questions or provide further documentation. If tax has been underpaid, you will have to pay what is due plus any penalty and interest.
In serious cases of fraud, the Special Compliance Office (SCO) can be involved. This is the IR’s unit responsible for the high-profile investigations. The SCO has the power to negotiate settlements and can also agree not to prosecute a taxpayer as long as full disclosure has been made. In cases where minor amounts have been undeclared or where small mistakes have been made on the return, the matter can be cleared up with little work involved. For serious fraud (many tens of thousands), they can request information from banks and other parties
FWD Can Assist With Any Tax Investigation
FWD have considerable experience in dealing with tax investigations for clients with complex tax affairs. We will ensure that your life and business suffers minimum disruption. We will act as a buffer between you and the Inland Revenue. Please contact us if you are facing an investigation or feel that your tax affairs need sorting out. Please also bear in mind that we can also offer insurance to cover you against the costs of our fees should you be subject to a tax investigation.