HMRC launches enquiries on businesses of all sizes every day, but are you ready if you’re next on the list?
Every day we hear businesses say, “they won’t investigate me”, but they could, and they will. After all, small businesses can be easy wins for them…
Keeping all this in mind, it’s up to you to ensure everything is in order and you are being compliant – whether that be working with an accountant or keeping vigilant – just in case you get that knock at the door.
Are you confident in your accounts?
It’s one thing feeling confident you’ve got everything in order, it’s another knowing everything is in order to the standard expected by HMRC.
If your business is selected, you or your accountant will receive an official letter or phone call which informs you of the enquiry, what type of enquiry they will be conducting, and lists exactly what they’d like to see to ensure you’re paying the right amount of tax.
Depending on the type of business you have, this can include anything from tax calculations, to your Company Tax Return, or your PAYE records!
What do I do if I receive a letter or phone call from HMRC?
Firstly, if you’re not 100% sure the contact you received is from HMRC, there’s nothing wrong with double checking before you respond!
People receive false correspondence from individuals pretending to be HMRC every day so it’s important to ensure you’re confident you’re communicating with the real deal before you act.
Once you have confirmed you’re communicating with the real HMRC, you have the ability to request an agenda or a list of the points they wish to cover so you can gather your records beforehand. The length of time HMRC can request evidence for will vary depending on the type of enquiry, and the seriousness of the investigation.
Types of enquiry
There are three types of enquiry the HMRC can launch on you; a full enquiry, an aspect enquiry and a random check.
A full enquiry is when HMRC reviews all of your business records. This typically occurs whenever they believe there’s a high likelihood of an error in your tax – whether intentional or unintentional.
Clue’s in the name with this next one! An aspect enquiry looks at a particular aspect of your accounts. This can occur if there are any inconsistencies in a specific section of your accounts.
Last, but certainly not least, they might launch a random check. These can occur at any time, regardless of who you are and whether your accounts or taxes have suggested any cause for concern.
During the enquiry
Throughout your enquiry, you should take your own notes to compare with HMRC’s records. This is a great way to ensure that if you are asked to sign anything, you can check whether HMRC’s record of events is consistent with your own as, once you sign, there’s no going back.
Once your accounts have been analysed and relevant questions have been asked, HMRC will let you know whether you have passed or failed the enquiry.
But how do I make sure I’m ready for an enquiry?
Maintaining detailed and up-to-date records will not only help ensure you’re ready for a HMRC enquiry if the time ever comes, but it will also inform you how your business is performing on a daily basis.
If you’re unsure whether you’re keeping suitable records for your business, or simply don’t have the time to stay on top of your accounts, make sure to get in touch with a qualified accountant. After all, it’ll be worth the piece of mind you get knowing you’re ready for an enquiry.
