You've received a call or letter from HMRC and you're concerned about how to deal with the situation. This is a normal reaction to a tax enquiry and it is important that you seek professional help. However we have written this guide so that you can take the right steps from the outset. If you follow the advice below you will put yourself at an advantage from the beginning of the enquiry by ensuring you are prepared.
If you're in the situation where you've recently been contacted by HMRC in connection with your tax affairs it is likely that you will be feeling somewhat concerned. However a tax enquiry is simply a process which can be managed by a tax investigation specialist. The right kind of tax consultant will often be someone who has an in-depth knowledge of the workings of HMRC, or even better, a consultant who has worked within HMRC in the past.
It's unlikely that you'll be indifferent to the fact that a tax inspector is looking into your business. However dealing with HMRC is a specialist area and it is unlikely that the average person will be prepared enough in these circumstances. Take a step back and view the situation as more of a process which you can overcome with the right kind of assistance. Remember that HMRC themselves are aiming to resolve the situation as quickly as possible with the minimum of fuss.
The race is on to get to the bottom of what is wrong with your latest tax return. This is more serious than late filing or making a typo. So, what is the best way to tackle the problem? As well as being the 'million pound' question this is also a very good question to ask at this point. Firstly anticipating what the taxman is going to ask you at the next point of contact, and being able to produce the right answers, will put you in an advantageous position. Ensuring that everything is done on time will also stand you in good stead.
Hire a professional consultant
A tax tribunal is a situation both parties ideally want to avoid. Therefore a professional tax consultant is best placed to help you resolve the situation before it gets out of control. Before your tax enquiry from HMRC gets to this stage it is a good idea to explore and 'alternative dispute resolution' (ADR) to speed up the process.
As your tax investigation progresses you may be wondering how much of your personal financial information you will be required to disclose. The answer is that transparency over your business finances is the best course of action due to the simple fact that HMRC have found reason to look into your affairs in the first place. Your aim is to avoid, or minimise, any penalties so offering a good perspective of where your affairs may have gone wrong will show that you are committed to resolving the matter before a large-scale dispute occurs. Having said this you are working towards a good compromise for both parties and there is no need to back down on any issues which you feel are already taken care of.
Your next step is to locate and examine tax advisors in your area. The best kind of tax consultant is likely to be an individual (or a firm such as Steedman and Company) who have extensive experience of dealing with HMRC tax enquiries. Steedman and Company are in the unique position of having ex-HMRC tax consultants on our team who understand the intricacies of the UK tax system.