HMRC uses tax enquiries as a way of making sure that taxpayers are paying the right amount of tax. 

An enquiry may be ‘full’, or as to one or more ‘aspect’. In a full enquiry, HMRC looks broadly at all significant risks of error in a tax return. An aspect enquiry is narrower, concentrating on one or more elements. It is our opinion that the overall number of enquiries into tax returns will increase substantially and, if you have been through the process, you will know that any enquiry like this can be a stressful and worrying experience. 

At present, HMRC resources are being targeted towards fraud arising in a number of Covid-related schemes. In the future, it is likely that attention will turn to a wider range of potential enquiries, with a view to ensuring that tax evasion generally is minimised. Therefore, taxpayers need to ensure that their affairs are fully up-to-date, either by making sure that, first, their annual tax compliance has been dealt with, and, secondly, where there are outstanding, historic tax liabilities (for whatever reason) these should be addressed by making an approach to HMRC on a voluntary basis.  Better to be proactive than just to hope for the best. A proactive approach will not reduce the amount of tax or interest payable, but it does allow for any penalties to be reduced: taxpayer behaviour is a key concern and unprompted disclosures are treated more favourably.

How we can help

Druces is able to assist with both annual tax compliance and with ad-hoc compliance and historic disclosures. Recently, one such case resulted in a large disclosure covering ten tax years and resulted in tax, interest, and penalties of approximately £129,000. This large disclosure, handled by Druces, was settled without question by HMRC.

In the event that further enquiries are made, or a negotiation is necessary, Druces has the expertise to take this forward on behalf of clients and to ensure that their interests are fairly represented. This includes COP 8 and COP 9 investigations. A particular benefit is that conversations and correspondence between clients and their Druces adviser is protected by legal privilege and remains entirely confidential.

Further information

For further information regarding these services please contact:

• • Paul Caruana on +44 (0)20 7216 5530 or p.caruana@druces.com
  • Estelle Tague on +44 (0)20 7216 5583 or e.tague@druces.com