Tax investigations and disputes resolution

A tax investigation can be a daunting prospect. If you’re having “trouble with the taxman”, or worried about how to resolve a tax problem, we’re here to help you. We specialise in resolving tax disputes, HMRC enquiries and minimising your tax risk.

HMRC have an automatic right to enquire into the tax affairs of all UK taxpayers, including individuals, trusts and companies. There is only a limited right of appeal, and following the pandemic, they are ramping up their investigation activity to help balance the books.

Whether you want to make a voluntary disclosure to HMRC, or already under enquiry, our dedicated team of accountants and tax specialists are ready to provide you with immediate support. We pride ourselves on offering a comprehensive and cost-effective service to clients and intermediaries including accountants, lawyers, and financial advisors.

How can we help?

To help you identify your needs, we’ve summarised below some common issues and current areas of focus for HMRC.

If you’d like to discuss any of these matters on a confidential basis, please get in touch or contact our Director of Tax Risk & Resolution Support, Graham Caddock.

A voluntary disclosure is telling HMRC that something is wrong with your tax affairs before they contact you. HMRC data gathering capabilities are formidable and supported by their database of information called “Connect”. HMRC also receive a vast amount of information from overseas jurisdictions under an automated exchange of information from over 100 countries called the Common Reporting Standard (CRS).

The main advantage of making a voluntary disclosure is in relation to penalties which can be up to 200% of the tax omitted. If an approach to HMRC is handled correctly, potential tax-based penalties (up to 200%) can be reduced significantly, often to zero.

A tax enquiry can happen at any time and is normally unexpected. There are two types of self-assessment enquiry - “aspect” and “full”.

Although an aspect enquiry usually deals with one or two points HMRC want to check (e.g. pension contributions or interest received), a full enquiry normally involves an in-depth tax-audit with HMRC often demanding to see the underlying books and records of a business.

This latter type of enquiry is often onerous, stressful, and demanding of both time and resources. We are experienced at handling all types of enquiries, robustly challenging HMRC’s use of their powers whilst at the same time protecting a taxpayer’s legal rights.

Code of Practice 9 (COP9) refers to an investigation by HMRC’s Fraud Investigation Service (FIS) where deliberate tax evasion (“fraud”) is suspected. Although tax fraud is alleged (and normally a criminal matter), HMRC FIS will agree not pursue a criminal prosecution (and seek a civil settlement) if a full disclosure of all tax irregularities is made. Such enquiries must be handled with great care to avoid the risk that HMRC will remove the safety” of the non-prosecution route.

We are fully experienced in handling this type of investigation. If you receive such a COP9 letter or want to make a voluntary disclosure of potential tax fraud to HMRC (and therefore secure the “civil” route), we are happy to have a confidential talk to advise you on the most appropriate action to take.

HMRC carry out investigations under Code of Practice 8 (COP8) where they believe substantial amounts of tax may be at stake, but they are not (initially) alleging fraudulent behaviour. COP8 is issued by when HMRC become aware of tax issues often involving offshore matters, trusts, structures, and tax “schemes” put together for the avoidance of tax.

If you, or a client, receives such a letter, it is important to fully explore the background and particulars of the matter before formally responding to HMRC. We can help you understand the nature of the investigation and respond appropriately.

HMRC’s Let Property Campaign allows landlords who owe tax from letting out residential property (in the UK or abroad) to bring their tax affairs up to date and to minimise exposure to tax related penalties.

HMRC have a dedicated unit that is constantly searching for undisclosed property income and offers beneficial settlement terms, including generous time to pay arrangements, for those that manage their disclosure to HMRC in the right way.

We are fully experienced with the campaign and can, at the same time as making a disclosure, ensure that your property affairs are structured in the most tax efficient manner.

Over the last couple of years, HMRC have been sending out thousands of letters to taxpayers, often referred to as “nudge” letters. The aim of these letters is to prompt a taxpayer to review their tax affairs and to make a voluntary disclosure to HMRC if they subsequently “discover” that their submitted accounts and/or returns are incorrect.

Recent nudge letters have covered areas as Cryptoassets, offshore income and gains and claims for Research & Development relief. These letters need to be handled carefully to ensure that any disclosure to HMRC is handled correctly and the lowest tax penalty is negotiated.

It's suggested that that almost £40 billion could have been lost through abuses of the various COVID-19 support schemes. HMRC’s Taxpayer Protection Taskforce has been created to seek out false and fraudulent claims and will offer a monetary settlement for those that come forward voluntarily. In the case of insolvent companies, HMRC have the power to serve a transfer of liability notice on its directors.

If you discover that you have made an incorrect COVID-19 support claim, we can help you correct the error, mitigate any financial penalties, and avoid the risk of a criminal prosecution.

A tax enquiry or investigation can lead to significant unexpected costs, even if HMRC accept that no further tax is due. The associated costs can quickly accumulate.

For a modest annual fee, our Tax Investigation Service gives you peace of mind that you can rely on our expert assistance on most tax enquiries, without the fear of incurring additional fees.

Tax investigations are on the rise as HMRC become more targeted, acting upon information provided to them from a variety of sources. We recommend more than ever before that all clients subscribe, no matter how simple their tax affairs may seem.

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