Enquiries – or, as HMRC now term them, ‘compliance checks’ – into tax returns are typically a fairly routine matter. Given that some are initiated on a random basis they can hit anyone who files a tax return. Investigations are a good deal more serious.
Investigations can target anyone, regardless of whether they routinely submit tax returns, and are typically triggered by the analysis of information that has come into HMRC’s possession. While investigations may commence on a civil basis, HMRC reserve the right to pursue prosecution in cases that they consider to amount to serious fraud.
If, as a result of an enquiry, it proves necessary to concede a point to HMRC and additional tax is payable as a result, there will also be a liability to interest and, usually, penalties of perhaps 20% or 30% of the tax. Where tax has been evaded, however, the stakes can be far higher – not just larger penalties (which increased to a maximum of 200% of the tax liability from 6 April 2011) but also the possibility of a court appearance and, in extreme cases, a prison sentence.
The next step
For a confidential discussion about your position or that of a friend or family member and to find out how we can help in your particular circumstances, please contact one of our tax advisers at your nearest location, or complete the contact form.