Have you received a letter about the HMRC compliance check? If yes, read on to find out more about the HMRC compliance checks process and the help you can get, during and after checks.
What is a compliance check by HMRC?
A compliance check is a formal investigation into your tax affairs to make sure your tax return is correct and/or to check that any payments made by the company are for the right amount and are paid on time.
Why would HMRC do a compliance check?
HMRC carry out compliance checks to:
- – make sure you’re paying the right amount of tax at the right time
- – make sure you’re getting the right allowances and tax reliefs
- – discourage tax evasion
- – make sure the tax system is operating fairly
Certain things may prompt HMRC to open a compliance check into your tax affairs. These could include:
- – entering figures on a return that appear to be wrong
- – making a large claim for a VAT refund when turnover is low
- – declaring a small amount of tax when turnover is high
HMRC will call or write to you, and your tax agent if you have one, to say what they want to check and why. If you think HMRC should stop the check, you should tell them why.
If HMRC has started a check, you should continue to file your tax returns and pay your taxes if they’re due.
HMRC may open a compliance check into any tax credits claims to make sure you’re getting the right amount of money.
If you have a tax agent or adviser and want them to deal with HMRC on your behalf, they must have formal authorisation. HMRC will deal with them during the check if they already have formal authorisation.
If they do not have a formal authorisation, you must apply for temporary authorisation on their behalf so they can deal with your compliance checks.
HMRC compliance checks: What you need to do
During the checks, HMRC may ask you to:
- – send them any information or documents that they may need
- – meet with them to discuss your tax affairs and records, but you do not have to meet with HMRC if you do not want to
If you have business premises or run your business from home, HMRC may ask to visit you to inspect your premises, assets and records. If you think the request is unreasonable or not relevant to the check, let the HMRC officer who requested the information know.
If HMRC cannot agree with you about sending the information or documents, they may use legal powers to get them. HMRC will do this by sending you an information notice. If you get a notice, you must give HMRC what they’ve asked for, or they may charge you penalties.
You are responsible for giving HMRC accurate information, and if you have a tax agent dealing with them on your behalf, you should make sure they have all the relevant facts.
If you help with HMRC compliance checks, they can:
- – complete it quickly and reduce any inconvenience to you
- – reduce the amount of any penalty you may be charged if they find there’s something wrong
Get independent help from other organisations
You can get help from charities and other organisations if you do not understand something about the compliance checks process.
Find out about the different types of checks and what happens during and after the check.
Outcomes of HMRC compliance checks
If the check shows there is nothing wrong, HMRC will bring it quickly to an end. If HMRC compliance checks show you have overpaid tax, you will be repaid with any interest due added. If you have underpaid tax, you will need to repay this. You will be charged interest and you may receive a penalty.
HMRC may issue an assessment or amend your return to collect any unpaid tax.
You can apply for Alternative Dispute Resolution (ADR) if you do not agree with HMRC’s decision or with what they are checking at any time during the checks.
It’s HMRC’s policy to deal with fraud using civil investigation procedures, wherever appropriate.
HMRC reserves criminal investigation for cases where they need to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate.
Find out more about their criminal investigation policy.
If you disagree with the outcome of the check
If HMRC makes a decision you can appeal against, they will write to you about the decision and tell you what to do if you disagree.
You will usually have 3 options. Within 30 days, you can:
- – send new information to the officer dealing with the check and ask them to take it into account
- – have your case reviewed by an officer who has not been involved in the matter
- – arrange for an independent tribunal to hear your appeal and decide the matter
If you need to speak to HMRC about their compliance checks, contact the officer who’s dealing with your case. You can find their details on the letter HMRC sent you about the checks.
You can also contact HMRC to get help with your taxes or to make a complaint.
HMRC compliance checks – How can MCL Accountants help?
Contact MCL Accountants on 01702 593 029 if you have received a letter regarding HMRC compliance check or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.