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HMRC to improve tax enquiry communications

HMRC has defended the extent of its powers to recover tax but commits to improving communications to ensure taxpayers understand their rights and obligations – particularly during a tax enquiry.

tax enquiry

In the latest report from the tax authority, it evaluates the implementation of powers, obligations and safeguards introduced in 2012. Since 2010, more than 100 reforms to the tax system have been implemented to tackle tax evasion and avoidance.

Some of the latest measures were introduced in 2020 to tackle any abuse of COVID-19 support, like the Coronavirus Job Retention Scheme. In May 2020, HMRC revealed that it was investigation 3,000 cases of potential furlough fraud.

HMRC latest set of commitments directly address communication and guidance concerns raised in the report. Its strategy to promote compliance, prevent non-compliance and respond even-handedly to non-compliance.

These communication commitments include:

• updating HMRC’s guidance to clarify taxpayers’ rights and obligations in relation to several powers, including Follower Notices and the Requirement to Correct non-compliance relating to income or assets held offshore;

• exploring ways to improve awareness of HMRC’s internal governance processes, to promote public trust in decisions on the General Anti-Abuse Rule, Accelerated Payment Notices, Follower Notices and the Diverted Profits Tax; and

• reviewing and updating guidance to clarify the range of factors that may contribute to reasonable excuse, including taking account of an individual’s personal circumstances. HMRC will support this work by building capability, confidence and consistency of approach where HMRC’s officers consider the application of reasonable excuse provisions.

Protect yourself from spiralling tax enquiry costs

The amount of reform since 2010 has inevitably led to an increase in the number of UK tax enquiries. We know that are expensive, intrusive and stressful. The cost of an enquiry can seriously impact your financial security.

You might be selected for an investigation because HMRC is targeting a particular geographical area in the UK. You might be selected because you work in a profession or trade which HMRC decides to pursue. Or you might even be selected entirely at random, by the click of a mouse.

For example, a farming partnership was subject to an aspect enquiry. It lasted only six months but fees totalled £5,000 despite the return being 100% accurate.

Our tax investigations service will meet unexpected professional fees to defend your position in the event of a compliance check.

Please contact Cardens at 01273 739592 to discuss.

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