HMRC Tax and VAT Investigations

Expert Tax Investigation Advice

HMRC can subject you as an individual or your business to an investigation at any time.

For income and corporation tax investigations HMRC will formally write to the registered address notifying them of an investigation. In rare instances HMRC will call a business to notify them of a tax investigation but this usually relates to investigations into VAT affairs.

At Kings Solicitors we are well placed to advise you and ease the burden by guiding and assisting through the investigation process, negotiating with HMRC to minimise your liability to tax, interest, and penalties.

Kings Solicitors can act as an important buffer to gain a tactical and strategic advantage resulting in investigations and disputes being resolved as quickly and cost effectively as possible. Our timely intervention will help to ensure that your business is safe from adverse tax enquiries.

For a free initial, confidential and no obligation consultation contact us at any time.

Types of Tax Enquiries

HMRC’s main information power is Schedule 36 of the Finance Act 2008. This entitles them to require a taxpayer to provide information or to produce a document if the information is reasonably required by HMRC for the purpose of checking the taxpayer’s tax position.

At the start of an investigation HMRC can serve two types of notices. A formal notice or informal information request. There will be a period of 30 days to provide the requested information to HMRC. If the request was made by telephone the response period will be much shorter.

If you are unable to comply within the timeframe Kings Solicitors can request an extension on your behalf.

The HMRC investigation will be either a Full Enquiry exploring a full return or alternatively a single element of the return known as an Aspect Enquiry.

What happens if you do not comply with an information notice

If you fail to comply with the information notice you may be charged a £300 penalty increasing to £60 a day for each day that you do not comply.

How we can help with a tax investigation

Kings Solicitors can provide tax investigation advice direct to you or your accountants and solicitors.

We will be able to advise you on the strengths and weaknesses of your case and identify an appropriate strategy in dealing with your tax investigation.

Kings Solicitors will take the following steps:

• Take full control of the tax investigation;
• Liaise with HMRC in relation to the tax enquiry;
• Meet with HMRC and agree strategy;
• Agree a tax investigation strategy with you;
• Provide advice to you and your accountant;
• Negotiate Settlement with HMRC and agree on minimal tax to pay; and
• Conclude the tax enquiry

Code of Practice 8 (COP8) tax investigation

A Code Of Practice 8 (COP 8) is where HMRC believe that you may have taken part in a tax avoidance or arrangement scheme to pay less tax. It is issued by the (FIS) HMRC Fraud Investigation Service.

Investigation by HMRC under Code of Practice 8 is used to establish the facts to recover any tax, interest and penalties due and not necessarily with a view to a criminal prosecution. This position may change if HMRC suspect or find evidence of fraud at any time during their investigation in which case they may deal with the investigation under Code of Practice 9.

Code of Practice 9 (COP9) tax investigation

HMRC Commissioners may decide to investigate using the Code of Practice 9 investigation of fraud procedure. This is used where HMRC suspect tax fraud. The investigation is undertaken by the Fraud Investigation Service (FIS).

The recipient of COP9 is given the opportunity to make a complete and accurate disclosure of all their deliberate and non-deliberate conduct. HMRC may offer the recipient an opportunity to make a full disclosure under a contractual arrangement called a Contractual Disclosure Facility (CDF) within 60 days. Provided a full disclosure of the deliberate conduct is made the Commissioners will not pursue a criminal investigation.

Failure to make a full disclosure of all irregularities, may result in the Commissioners to start a criminal investigation with a view to prosecution. The term ‘deliberate conduct’ means that the recipient knew that an entry or entries included in a tax return and/or accounts were wrong, but the recipient submitted it/them anyway, or that the recipient knew that a liability to tax existed but chose not to tell HMRC at the right time.

In the course of the COP9 investigation, if the recipient makes materially false or misleading statements, or provides materially false documents, the Commissioners reserve the right to start a criminal investigation into that conduct as a separate criminal offence.

Appeals

The HMRC Appeal Process

There is a 2-stage process for a taxpayer to dispute a HMRC decision:

Stage 1: give notice of appeal to HMRC within 30 days of HMRC’s notice of their decision. The outcome will be HMRC will confirm their first decision, amend their decision or agree with the taxpayer’s assessment.

Stage 2: if no agreement can be reached in stage 1 then a taxpayer can avail themselves of two further options:

• HMRC can offer an internal review of the disputed decision (or the taxpayer can request this procedure at any time) by a different HMRC officer not linked in the making of the disputed decision.

OR

• A taxpayer can appeal to the First Tier Tax Tribunal if the taxpayer cannot agree their position following the review. The independent tribunal will make a determination on the case. A further appeal is permitted if a taxpayer does not agree with the decision.

Kings Solicitors can remove the burden and stress of having to cope with the information request. Contact Kings Solicitors for a free initial consultation.

Our specialist areas

• HMRC Code of Practice 8
• HMRC Code of Practice 9
• Criminal tax investigation services
• Serious civil tax investigations services
• Tax enquiries - compliance checks
• Mediation - Alternative Dispute Resolution
• Voluntary disclosures
• Worldwide Disclosure Facility
• Tax avoidance reviews
• Offshore assets and foreign income
• Litigation - tax tribunal and judicial review
• Challenging HMRC 'Discovery' Assessments
• Employment compliance - benefit and status reviews
• HMRC Penalty Mitigation
• Coronavirus Job Retention Scheme fraud
• HMRC’s crack down on dog breeders
• Eat Out to help out Claims investigations (EOTHO)