HMRC self-assessment enquiries

Our knowledgeable tax specialists can assist and guide you through your case with their extensive experience on all types of HMRC enquiries.

Overview How we can help you Scenarios: HMRC enquiries Our latest thinking We're here to help

Being the focus of the investigative arm of HMRC can be extremely stressful.

The enquiry regime has been around for many years now but is both nuanced and complex, as result of which it is still often misunderstood by HMRC and advisors.

Enquiries can range from an aspect enquiry, in which one or more areas of a tax return are reviewed through to an onerous full enquiry where the entire tax return is checked in detail.

The vast majority of enquiry cases are opened only after HMRC has identified a tax risk significant enough to warrant focusing resources on issues likely to yield additional tax, hence no notice opening an enquiry should be taken lightly or handled without specialist, experienced support.

How we can help you

Opening an enquiry

Tax is complicated. Self-assessment enquiries are not immune from that complexity so it may be that technical or procedural errors have been made by HMRC which an experienced specialist can identify. These may appear small, but they can impact on the chosen strategy and the validity of the entire enquiry.

During an enquiry

An enquiry inevitably means HMRC asks for documents, information, explanations and supporting evidence.

HMRC does not have an automatic entitlement to see everything even if it relates to tax, the data must be ‘reasonably required’ in order to check the tax return under enquiry. HMRC might, for example, question historical transactions or ask about the affairs of other, perhaps related, parties such as close family members or subsidiaries of a holding company under enquiry. Detailed knowledge of the relevant legislation, case law, taxpayer's rights, safeguards and boundaries is vital.

A robust response to HMRC may be merited but sometimes it could be helpful to volunteer data; years of experience spent specialising in HMRC investigation work help inform such judgement calls.

Closing an enquiry

If adjustments are found, HMRC will issue a formal closure notice making those amendments, which can be appealed if there is still disagreement.

Depending on the nature of any amendments HMRC might seek to raise assessments to collect tax for other years, or issue tax based penalties which can also be appealed. Again, the rules and case law on this are complex.

If HMRC refuses to close an enquiry, the taxpayer has the right to ask the First Tier Tax Tribunal to order that a closure notice is issued. This can be a powerful tool if used appropriately in the right circumstances.

All types of enquiry should be taken seriously. We can help guide you through the complexities, to ensure that you comply where necessary while preventing HMRC from 'over exercising' their powers, so that HMRC's concerns can be addressed and ultimately resolved.

Scenarios: HMRC enquiries

Validity of enquiry

The client’s accountant provided data to HMRC without question; HMRC asserted that adjustments were needed and the client then sought a second opinion from Crowe. We rightly questioned the validity of the enquiry notice itself which led to the enquiry being closed without amendment to the tax return.

Closure notice

HMRC opened an enquiry into one family member, then sought to justify a deep exploration into the financial history of the family’s businesses. Crowe provided only data considered to be relevant, or ‘reasonably required’, and successfully applied to the tax tribunal for a closure notice. The tribunal noted that HMRC’s continued questions amounted to a fishing expedition.

Company enquiries

HMRC opened an enquiry into the holding company of a group and asked numerous questions about entries in the consolidated accounts which of course include the results of all group companies which were not under enquiry after the deadline for opening additional enquiries had passed. We reminded HMRC of the relevant enquiry legislation and provided responses relating solely to the holding company’s financial statements, following which the enquiry was closed with only a few minor amendments.

Reasonably required

During an enquiry into a Limited Liability Partnership (LLP) HMRC asked to see the LLP Agreement. We argued that the particular LLP Agreement was not reasonably required to check the LLP return as it would not affect the LLP’s (or individual members’) profits but would include numerous non-financial clauses covering matters such as internal governance which are not only confidential but also have no bearing on the tax return under enquiry. HMRC reluctantly closed the enquiry without amendment.

Our latest thinking

Information requests: what can HMRC ask for?

10 things to think about when receiving a request for information and documents from HMRC

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