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Tax Investigation Specialist: why you might need one and 8 tips to survive an investigation

By admin
13 Jul 2023
Tax Investigation

A letter arrives from HMRC who you going to call? A tax Investigation specialist

A meeting with HMRC regarding the apparent failure to account for taxes correctly is unlikely to be high on your agenda. Where you are subject to a suspected serious fraud investigation, HMRC will inevitably want an ‘interview’. The term ‘interview’ is used most likely because it depicts how serious the position is (you’ve been a very naughty person and you need telling off!). Whilst it may feel that the ‘interview’ is like an ‘interview under caution’, it is not. However, there will be a HMRC officer that will simply enjoy the position of authority when asking you difficult questions.

There is no legal requirement for you to attend that meeting or answer questions. The HMRC officer will view your so called ‘non-compliance’ as a lack of cooperation, which could inevitably mean higher penalties. I would tend to disagree on both counts. A person who has no legal obligation to attend a meeting cannot by not attending be uncooperative as far as the law is concerned. Similarly a person by not answering questions cannot be uncooperative if the mechanism their behaviour is considered within, is one that requires a disclosure report.

An issue will be how the HMRC officer will perceive you. You didn’t answer any questions. Regardless of the law, you acted uncooperatively. You weren’t a team player. You didn’t join in the game.  HMRC left the meeting with little further genuine new information although you did assert ‘I have instructed my advisers to undertake a comprehensive review and any material identified irregularities will be included within my disclosure report. ’.

Handling a tax investigation case takes a certain set of skills. Your accountant handling an enquiry (which could be simply gathering information ahead of a serious investigation) may have likely said to you at some point ‘I don’t know why HMRC are asking for this information, it doesn’t make sense’. Despite providing requested information, HMRC letters continue requesting more in the same and some different areas. It feels like the enquiry will never end. An investigations specialist reading HMRC letters will normally be able to identify areas of concern not considered by your agent. 

Another skill an investigation specialist has is the ability to pull information from various sources with a view to identifying risks, what may have given rise to the investigation and also to sound test your disclosure.

An investigation specialist will know what HMRC can do legally and when they are pushing the boundaries. HMRC don’t just push, sometimes they leap frog, or strap a rocket to their back.  For example, having been appointed recently on one case, we found the previous agent provided information to HMRC going back twenty years because HMRC asked for it, although vaguely suggesting they were entitled because ‘in the absence of reasonable care, an act would be deliberate’. HMRC weren’t entitled to the information but by providing it, HMRC’s questioning was only ever going to increase.

An investigation specialist will consider how to conduct the investigation from the outset. They won’t look to play letter ping pong with HMRC. They will want to take control and manage the disclosure from the outset with the intention of mitigating penalties. A really good investigation specialist will also be technically competent. An ex-HMRC officer may be a really good agent although they may not be as technically competent as say a Chartered Tax Adviser or someone who trained with the top four.  HMRC officers may obtain CTA. Such an officer may be more equipped for technical disputes, which makes being an investigations specialist more enjoyable.

An investigation specialist contemplates all different challenges and what evidence is required to achieve a result. They think differently because they have spent years having to find innovative solutions to challenges, dealt consistently with unusual or sensitive situations,  and they have to process large quantities of information quickly as well as recall information quickly. 

If you are under enquiry or have received a letter regarding offshore assets and income or suspected serious fraud:

  1. Take a moment to collate your thoughts.
  2. If you are worried, it may help to talk to a tax investigation specialist. If the specialist makes you more fearful, they might not be the right one for you. These issues can be sorted out and managed without causing you significant distress.
  3. Do not contact HMRC directly and if HMRC contact you directly, take notes but do not speak about your tax affairs without support and advice. You can always tell HMRC you will take a note of their questions and consider before responding. You don’t know the pitfalls of the law and we want to preserve the best opportunity for you to mitigate your exposure.
  4. Your accountant is unlikely to be able to manage your enquiry as efficiently as  a specialist. Your accountant will have responsibility towards other clients and the pressure on them to handle accounts and returns may detract from progressing the enquiry.
  5. Don’t ignore the letters, they won’t stop. Get the letters to a specialist quickly.
  6. Do not destroy records, it is likely that records will help solve some of the issues.
  7. Do not move funds without seeking advice. Moving money away won’t stop the enquiry.
  8. Treat HMRC officers with respect no matter how difficult that may be at times.

There are many more tips to help you through an enquiry. For further information or would like to speak to an investigation specialist ….Contact a member of our team here!

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