Tax Investigations
tax services
Tax Investigations
One of the major departments of H M Revenue & Customs is known as The Compliance Unit. They ensure that taxpayers, individuals and corporate entities, account to the Government for the correct amount of their respective liabilities to taxation. Their real function is to seek out and assess taxpayers who have underpaid their liabilities.
Are you being investigated for TAX?
The reasons for underpayment are numerous from honest mistakes to intentional fraud. The officers in the specialist units are skilled in carrying out risk assessment of tax payers returns. The penalties that can be imposed are severe and in the more serious cases a prosecution could ensue. The cost of the enquiry can be significant not just in terms of tax, interest and penalties but in the time and effort required from the tax payer.
There’s no need to feel exposed—turn to MJ&Co Accountants for professional, tailored support and true peace of mind. Our expert team is here to guide your small business every step of the way.
TAX
Tax Avoidance
The recent negative media attention on tax avoidance and tax schemes has changed the landscape for accountants.
There are fewer tax avoidance schemes around but accountants tend to take one of two points of view:
If it’s legal then it’s fair game. The loopholes exist so if HMRC don’t close them, we will exploit them.
I’m uncomfortable with this concept and will tell my clients it’s not a good idea.
Some accountants will continue to advise a client who wishes to proceed with a scheme after advising them of the possible risks, whilst others will refuse to have anything to do with what are considered to be dubious tax avoidance schemes, which are frowned upon by the Revenue.
But is the second group really acting in their clients’ best interests; or are they more concerned on the potential negative impact on their reputation with HMRC? This second group fears that their accountancy practices may be targeted by HMRC because a client had, against their advice, entered what was clearly an aggressive tax avoidance scheme.
Tax Avoidance Checklist
When someone approaches me and asks advice on a new scheme they’ve heard of, I go through the following list:
I check the list of “tax planning to be wary of” on the spotlights page of HMRC’s website.
I try to ensure clients who want to proceed understand that they may well be challenged by HMRC and all of the schemes customers will be subject to specific and detailed investigation. Participation in such a scheme would identify my client as someone prepared to be involved in abusive tax avoidance or possibly tax evasion and therefore at higher risk.
I advise that the cost and stress of such an investigation is likely to be significant.
I inform the client that if the scheme is found to be fraudulent or fails in the courts then HMRC will demand payment of underpaid taxes, interest and penalties, which can be up to 200% of the tax owed.
Is there a high risk of my firm being tainted if a client participates in a scheme that I consider to potentially fall into the tax evasion category and if so, I will refuse to act.
As new schemes may not be on HMRC’s “Spotlights Page” or tested in the court; if necessary, I will telephone a tax inspector that I know to be even handed and explain the proposal to him and then make a decision on whether or not to advise the client to proceed.
It is not for me as a professional accountant to selectively moralise on my clients behalf, after all they do pay me to minimise their tax liabilities and plan their business and personal business affairs in a tax efficient and legal manner. I am more than happy to try and exploit the grey band between the black and white economies, but will only proceed if I’m satisfied that it is unlikely that HMRC will challenge such advice.
There have been cases in the past, when I have suspected that a client has understated their sales or overclaimed on their expenses. My approach to this situation is simple, I will ask the client a straight question and if he or she asserts that their books and records are an accurate reflection of their trading activities, I will prepare their Accounts based on their records. I do however; warn them of the consequences if my suspicions are proved correct in a subsequent tax enquiry.
Speak to a tax expert today.
There is no need to feel exposed – come to Morgan Jones & Co. We will ensure you are assisted professionally. We offer Investigation Indemnity Insurance at a modest cost, which for a small business can be as low as £100 per annum for peace of mind.
