Accountants and Bookkeepers in Malvern - Turl & Co

Tax Investigations on the Rise

This past year we have seen an increase in tax investigations, particularly on individuals.  Recent figures suggest that HMRC’s new integrated systems are helping to identify those perceived to have underpaid their tax.  HMRC boasts that their new ‘Connect’ system cross-references more than 22 million lines of data including self-assessment tax returns, property and financial data.  Connect identifies more than 500,000 cases a year for investigation.

Revenue collected from investigations has also risen, with the figure in 2018/2019 being £13.14bn, a 27% increase over the previous year according to ICAEW, one of the major accountancy bodies.  Whilst this is partly due to repayments of the loan charge on disguised remuneration and other charges, it does seem that an increase in investigations into individuals has also played its part.

New, tougher penalties were also introduced in recent years for tax evasion and offenders are now more likely to be pursued through the criminal courts.

HMRC state that everyone must take reasonable care to get things right, which includes making sure that submitted tax returns are accurate. 

We have seen an increasing number of new clients come to us over the past year who have been issued with an investigation notice.  Often, it is only when an investigation is underway that a client realises that their tax returns or the accounts figures entered on them, have not been accurate.  This causes obvious anguish if the client had previously relied on what they saw as a ‘good friend’ or ‘trusted adviser’. 

The work involved with an investigation can be significant.  This is one of the reasons that we take so much care over the work that we carry out on behalf of our clients, to ensure that as far as possible we can break down and standby the figures contained on the tax returns we submit.  Professional investigation assistance is not cheap and if the investigation last weeks or months then these fees can mount up.

Although we are usually confident that we can close down an investigation on one of our clients relatively quickly, it does depend on the amount of records that HMRC request, how they want the information presented and a number of other elements.  As a safety precaution we therefore recommend that our clients take out investigation insurance, particularly if they are VAT registered.  We usually refer our clients to the company PfP who offer professional fee protection and keep leaflets in our office as we have an ongoing partnership with this firm.  They can also call them, quoting ‘Turl & Co’ on 0845 307 1177. However, other firms offering similar are available.

Never feel that you are entirely safe from investigation as random checks can also be carried out.  It is, in our opinion, always better safe than sorry.


Tags: Tax | Tax blog | Investigation | Accountants | Accountants in Malvern

By: Karen Lowen
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