HMRC visit / Inspections

What to do when HMRC visits

With HMRC starting their random record checks again there is always the worry that something may come out of these visits which will result in more tax being paid. These visits not only cause disruption to your business they put emotional strain on individuals. However, there are a number of things you can do to make the experience far less stressful.

 

Pre-arranged visits 

If the appointment is made via the phone, ask for the following to be confirmed in writing;

On the day of the visit have all of the requested records ready making sure there is nothing extra that they did not request. Put them in a room ready for the visit where a review can be carried out, otherwise they can request to take them away if there is not sufficient room or it is unclean or not safe to work in.

 

Unannounced Visits

When HMRC visit unannounced you should establish at the outset what is happening.

Where a routine inspection is being carried out but there has simply been a failure somewhere along the line to notify you of their intention to visit, you may ask HMRC to come back another time so you can have the records ready your accountant can then be present.

If a representative of HMRC has a formal notice signed either by a Tribunal or an Authorised Officer of HMRC it does not mean that they have an automatic right of entry. If the notice is signed by an Authorised Officer, or if there was a reasonable excuse for not permitting entry, there would be no penalty for refusing entry. If the notice has been signed by a Tribunal there could be an initial penalty of £300 if there was no reasonable excuse for not permitting entry. These visits are not random and our advice would be to seek professional advice before letting them in. Wanting your accountant present is a reasonable excuse not to permit entry.

Visiting Officers will initially ask for the business owner. If they are not present they can ask for anyone who is in. If no one is in charge they can enter the premises and leave the notice displayed in a prominent place, however anyone can refuse them entry and they should go away.

 

Your Rights 

HMRC does not have the right to meet the business owner.

Both types of visits should be inspections not searches, where they have the right to see any business record which is reasonably required to check your tax affairs. If it is unclear that an item would be reasonably required then HMRC should be challenged immediately. If, the extent of the inspection has been made clear prior to the visit, this should not be extended without justification.

You can opt to have any meeting or record review at your accountant’s premises as this would give less opportunity or HMRC to request further information without it being reviewed by your accountant first. HMRC must be courteous and polite at all times and explain to you what they need to see and why. If you feel they are rude or unreasonable then you can complain.

HMRC Officers have the same right to courtesy as you do. If an Inspector feels he has treated unfairly he will be far more inclined to stay until he has found something and will also be less understanding when negotiating final settlement. Officers will expect sufficient space in which to conduct their enquiry, a safe working environment, warmth and refreshments. If they don’t get some or all of these, they can ask to remove your records back to their office.

 

Take TAX Advice 

If HMRC make any contact with you direct you should always let your accountant know who called and what they said. If you are unrepresented then contacting Tax Champion prior to any visit can help put your mind at ease. We can give advice prior to the visit and attend on your behalf.

In our experience we are seeing approximately four times more HMRC enquiry activity than at this time last year. With the emphasis on closing the tax gap HMRC are using every opportunity to find lost taxes. These enquiries can cost between £3000-5000 in agents fees alone. At Tax Champion we can give you an idea of costs at the start so you get the full picture. 

Please contact us for more details where we can provide a summary of likely costs.

 

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