5 Tips to Reduce the Impact of a HMRC Tax Enquiry

This article relates to the UK self-assessment system for individuals and partnerships. Once your tax return has been filed HMRC have the option to review it and look at the underlying records. This may either be only part of the self-assessment tax return (SATR), known as an “aspect enquiry” or all of the tax return, known as a “full” enquiry. There could be a number of reasons why HMRC have decided to look into a particular tax return, a lot of their enquiries are undertaken as they consider the tax return to be “high risk”. However it may simply be the luck of the draw, as many SATRs are selected for enquiry on a random basis. If HMRC consider there to be errors or emissions on the tax return on concluding their enquiry then there may be additional tax, national insurance, penalties and interest due. Whilst no one can guarantee that a SATR will not be enquired into, the tips below are provided to reduce the stress of an enquiry should your tax return be selected. Some relate to measures that you should take prior to an enquiry whilst others are for during the enquiry.

  1. Keep your tax records in an organised manner. – The more organised and better maintained your records are, the easier it will be for HMRC to conduct their review and you to answer any queries that may advise.
  2. Review all variations prior to signing your tax return. – Variations year on year should be looked at carefully and explanations obtained. Most good accountants will run through this with you prior to filing your tax return.
  3. Check that all sources of income and gains have been fully disclosed to HMRC. – If you are in any doubt over what should be included on your tax return obtain competent professional advice.
  4. If under a HMRC tax enquiry engage the services of a good accountant. – This is normally money well spent. A good and experienced accountant will know HMRC procedures and what they can and can’t do. In addition representations may be made on your behalf and subjective points raised argued for you.
  5. Invest in a professional fee service. – Most accountants normally offer such a service these days. For what is normally a modest fee the accountant has the opportunity to claim back all their fees for representing you in a tax enquiry from an insurance company, should the situation arise. As such you will not need to find additional resources to meet their fees. Of course, terms and conditions will apply and these should be checked with the accountant.

This article is not intended be comprehensive and the author does not guarantee the accuracy of any information provided in this article and recommends that you do not take any action, whatsoever, based on the information provided. By the fullest extent permitted by law, the author does not accept any responsibility for any actions you may or may not take based on information contained in this article. This article contains general information and is not a substitute for specific independent professional advice.