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HMRC Tax Investigation: What To Expect From It And A Complete Insight

The HMRC Tax Investigation or Her Majesty’s Revenue and Customs investigation occurs if there is a complaint lodged against an organization or any misunderstanding surfacing in the market. In this case, the HMRC tax investigators will go through every single expense your company has made or the invoices you have paid to date. If your documents are in order, you need not worry. HMRC has all the legal rights to audit the companies functioning in the UK.

It is essential to provide the investigators with the right information. Businesses that are not abreast with the whole process can even hire an HMRC Tax Investigations provider. If any genuine mistake or problem is committed, the professional accountant will sort it out before the tax investigations.

Types Of HMRC Investigations

  1. Full Enquiry: The entire tax records of the organization is being evaluated to check out if there is an error in the tax reports filed by your business. When HMRC investigates the limited companies, they will look closely into the company directors’ tax affairs and the business.
  2. Random Checking: Random Checks can happen at any moment. It can occur regardless of the position of your accounts and whether you have triggered some alert.
  3. Aspect Enquiry: Only a particular type of account checking is carried out in this type of tax investigation. It can be on the error or inconsistencies in the maintenance of the tax records.

Top Reasons HMRC Investigates Company’s Accounts

A few common errors can trigger the investigation by the HMRC officials. Some of the reasons are cited below:

  • If there is a high-risk industry involved in cash receipts and payments, they are scrutinized to check the avoidance of taxes.
  • You are just frequently filing the tax returns
  • The tax investigators have received a tip-off from someone about the concealing of taxes.
  • You run a business in a particular sector targeted for HMRC investigations.
  • Your tax figures are dramatically different from your business position’s normal figures.
  • There is a large claim for VAT made by your business.
  • Businesses with a higher turnover file only small tax returns.

What to do during Investigation?

It is necessary to furnish transparent information to the HMRC tax investigators rather than concealing any mistakes or facts. Before investigations, you must have an exact word with your company’s accountant to provide relevant documents.

If you hire an accountant, present before them all the expenses your business has incurred and the invoices paid by you. You must submit all other original documents required by the HMRC investigating officials.

Keep your VAT records, sales invoices, payroll records, job quotes, bank and credit card statements, and purchase invoices and expense receipts ready during your investigation.

Wrapping Up

HMRC can carry out investigations at any moment, whether it’s a random check only. But the businesses must have records of all their transactions, assets, and liabilities in one place. If you want to make your HMRC tax investigation process easier and clean, you can reach out to the Pearl Lemon Accountants. They have a team of experienced professionals who will look after your timely tax arrangements.

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