An enquiry. Sounds a little mysterious, doesn’t it? A bit too formal and old-fashioned. Sinister, even. It conjures up the image of seemingly polite people rooking through your private business. It conjures up the image of people looking for faults where there might be none.

And, in the worst-case scenario, it might make you feel… well, kind of scared. Nervous at the very least. Even if you’ve done nothing wrong.

Well, don’t worry. Because even if you’re a little unsure how to move forward? Today we’re going to reveal all. We’re going to reveal that these enquiries, though serious, don’t need to worry you at all.

If you do things right.

Before we begin, though: are you still a little unsure about just what, exactly, an HMRC enquiry really is? Don’t sweat. We’ve got you covered.

Now, first thing’s first. When discussing how to handle an enquiry, there’s one important rule we have to remember:

Though an HMRC enquiry is a lawful or statutory request to look into your returns, HMRC often use their own, non-statutory rules.

So what the heck does this mean?

It means that with a formal enquiry – or a statutory request – you, the taxpayer, are required to comply. You must send them whatever information they ask for.

And in a non-statutory request? Well, it’s near enough the opposite, really: you get to decide whether or not you comply.

Of course, that’s not to say you shouldn’t play ball! More that you should take a breather before panicking. And then? Seek out whether your compliance would be in your best interest. Speak to your accountant. Speak to us.

Delving a little deeper.

Ultimately, it pays to prepare, whatever department of HMRC you’re dealing with.

For instance, say you’re dealing with a department called the FIS. Well, that stands for the Fraud Investigation Service. So you can probably guess that if you’re hearing from these guys, the issue’s pretty serious. In fact, you’d be wise to get in touch with us immediately.

But even if you’re facing the Fraud Investigation Service? Don’t panic.

There’s good news. Really, there is:

HMRC won’t usually prosecute the taxpayer if they disclose any wrongdoing.

So if you think you may have accidentally paid too little tax, and HMRC is investigating, it mightjust be in your best interest to tell the truth. Come clean, and everything will be settled far quicker.

Think of it as immunity if, one way or another, you’ve underpaid – you’ll end up paying a cash settlement, most likely, but far less than the HMRC usually believes you owe.

And that’s a better outcome than prison, right?

But how does an enquiry start in the first place?

Whether you are faced with an enquiry from the FIS or an enquiry from a different department within HMRC, enquiries always start with HMRC giving you notice.

Thank god for small mercies, right?

Normally, most enquiry notices are given by the first anniversary of when you filed your return. For example, if you filed a wrong or miscalculated return on New Year’s Day, you’ll hear about it before next January. Usually, anyway.

Either way, there’s no right of appeal against this kind of notice. There might be, sometimes, during the enquiry itself. But usually it’s best to take stock: this is happening, one way or another.  

Still, this notice is something to be thankful for. Because it gives you time to prepare.

Thirty days, at the very least. It might not sound like much, but trust us, it’s good news.

And more good news?

The notice letter isn’t part of the enquiry process. Meaning that the time limit is not statutory. Meaning there’ll be no penalty if this time limit isn’t met.

Phew!

Now, that’s not to say you should ignore this notice – not by any means. More that, once again, you’ve got time to get ready for what comes next. Because the enquiry isn’t going away. The officer will continue to chase for a reply or, ultimately, they’ll issue a formal notice for information, a procedure known as Schedule 36.

To keep it simple, Schedule 36 is the way that HMRC demands information. And once again, in most cases, it’s always best to comply. Really, it’s best to volunteer information after the opening notice letter, even. Once you’ve had a chance to consider each item requested, of course.

So what can we take away from this?

To conclude, if you’ve received notice of an enquiry, your first step is to take a deep breath. The second? Find out which department you’re dealing with. Because if it’s the Fraud Investigation Service, you’ll need our help.

Ultimately, though, whatever department you’re dealing with, once you receive a notice, your HMRC officer is going to expect you to volunteer information. If you don’t, they’re going to demand it through Schedule 36.

Final thoughts

If HMRC requests information that seems reasonable? Of course, do your research first. But then? Provide it.

And if you think the requested information seems like overkill? You may just be better off providing it anyway, once you’ve had a chance to chat to us.

Why?

Once again, the enquiry isn’t going away.

And you don’t want to annoy the officer in charge of your enquiry, do you?

But still, what if you or your accountant believes some of the information they’ve asked for isn’t necessary to volunteer?

Well, that’s a topic for another day.

We hope that clears things up. But if you’re still feeling a little worried about an HMRC enquiry?

Get in touch. And we’ll give you peace of mind.

The Tax Haven. 

For your free consultation, call us on 0800 133 7596

5 thoughts on “How to handle an HMRC Enquiry

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