If you are concerned about the possibility of an HMRC tax investigation or have been notigfied that you or your business are being investigated by HMRC, we can help.
An investigation might relate to irregularity picked up or suspected by HMRC through to suspected fraud. Any investigation of course needs to be taken very seriously and good advice, accounting and possible legal, is strongly recommended.
Small businesses also often confuse investigation with inspection. Most small busienses, at some point, will get a routine tax inspection, especially businesses registered for VAT. An inspection also needs to be prepared for but does not denote any pre-existing suspicion on the part of HMRC of tax avoidance or irregualrity, so it's important not to get defensive.
As most people in the UK are aware many very large, very profitable companies pay very little tax: Vodafone, Starbucks, Google, Apple to name a few that have hit the headlines. Ethically dubious they may be, but these effectively constructed tax arrangements ensure the UK government sees as little as possible of the profit generated from the UK population.
They save so much tax in fact, that it far outweighs the cost of expensive accountants and lawyers to devise and implement the scheme in the first place and the subsequent cost of defending it when HMRC choose to investigate - which they must do right?
The answer is yes – in a big way.
With an £800m war chest and £5bn a year recovery target HMRC are continually checking the compliance of individuals and companies tax returns. Their point of focus perpetually changes to ensure that every part of the system comes under regular scrutiny – VAT, corporation tax, income tax, IR35 compliance, CIS, the list goes on.
Whilst HMRC may recover more from investigating bigegr businesses, do not assume that as an SME you are probably too small a fish to be of interest.
While HMRC are employing ever more effective technology in order to identify areas of risk, many of the investigations instigated by HMRC are random. If selected, a subject can be asked to provide records, attend meetings on or off-site, provide answers to lengthy questions, and ultimately call on their accountant for support when things get technical.
Understandably HMRC need to enforce the legislation, but neither the opportunity cost to a small business owner of dealing with the enquiry themselves or the cash cost of instructing your accountant to deal with it on your behalf seem fair to a law abiding entrepreneur. But nonetheless it is the hardworking business owner who coughs up the cash.
For a typical entrepreneur however, minimizing your tax bill merely extends to a combination of extracting cash through minimal salary and dividends and making sure you claim all the possible expenses, including the spare room you use as an office. No offshore arrangements here.
That is why we at Accounts and Legal are now offering a fixed fee Tax Investigation Service, in partnership with Abbey Tax. One annual payment will ensure that the costs up to £100k for addressing HMRC investigations will be dealt with by us at no additional cost to you (unless you actually have tax to pay of course). The service offers complete piece of mind for clients that should an investigation arise, they can continue to run their business safe in the knowledge that the investigation is being handled by an experienced accountant and at no extra cost.
So make sure that if the letter from HMRC ever arrives, you don’t find yourself drinking a Starbucks coffee, on your iPhone, while - over Vodafone’s 4G network -Googling “What to do when HMRC chooses to investigate you”. You remember you signed up for our Tax Investigation Service, relax, and turn your attention to considering how you can grow your business overseas – the Channel Islands perhaps?
Here at Accounts and Legal we are set up to support your business. Whether that’s making sure you’re fully compliant or supporting you to grow. Contact one of our team to hear how we can support your business.