Tax Investigation


No taxpayer wants to receive a letter from HMRC informing them that they are to be investigated.

We are experts in tax investigation management, let our specialists work with you to reduce the stress and worry of the process. Regardless of your situation and location, we can apply our expert tax knowledge and experience of investigations to offer you comprehensive advice and support throughout the process.

Tax Investigation experience

Our tax team have a broad range of knowledge and experience in dealing with HMRC tax enquiries and investigations which can include:

  • Investigations into specialist areas such as VAT or technical issues
  • Disclosures which may be voluntary
  • Expatriate enquiries or high net worth investigations
  • Risk Management for corporations
  • PAYE/NIC status investigations and CIS issues
  • Time to Pay arrangements

We have worked with all types of taxpayers, from a diverse range of sectors, and can use our negotiation skills and experience to arrange manageable settlements with HMRC, relating to many different taxes including Corporation Tax, Capital Gains Tax, VAT, Self Assessment Income Tax and Inheritance Tax.

Every member of our investigation team is very experienced; they have the knowledge, skills and expertise to offer you the most comprehensive support during an investigation.

Reasons for a Tax Investigation

There are many circumstances that can trigger a tax investigation and it is very difficult, if not impossible to find out the reason why you are being investigated.

Sometimes the cause can be relatively straightforward, such as a discrepancy or an omission identified by HMRC. Other instances where a tax investigation may be required include random testing as you may be in a target area for HMRC or something that you have done such as irregular income which goes up and down by a significant amount over a period of years or claiming overly high expenses.

Whatever the cause, the result is still the same and we have efficient and effective strategies to manage the process to achieve the best possible outcome.

Tax Investigation - First steps

If you have received a letter stating that you are to be investigated, read it carefully and then contact a firm of accountants, such as ourselves, who are skilled in managing tax investigations.

Our team have a wealth of skills in managing the process whether you are an individual, a limited company or any other type of taxpayer. You are more than welcome to visit; call or contact us for a free initial discussion about your tax investigation letter.

A tax investigation can vary in length, from a simple letter informing you that the investigation is now complete to many months of HMRC requesting more and more information. Many taxpayers ask how far back HMRC can go, and the answer is that it depends, but it can be many years.

Record keeping

It is important that you routinely keep good accounts and records if you are a sole trader or business owner, and it is even more so if you are under investigation for tax. During the investigation, HMRC will let you know what information they would like to see, but this can vary depending on what they are looking for and what they are checking. As part of the investigation you need to provide information quickly, and it should hopefully be the same data that you provided alongside your tax return.

Tax Investigation experts

Tax investigations can be a daunting experience and the pressure can mount when your business finances and records are under investigation. Whatever type of investigation that you have been approached about, we can provide the expertise that you need to help you through. Our team know and understand what the HMRC will be looking for and can often resolve any issues, collate evidence and address the investigation promptly to bring it to a close as swiftly as possible. We are able to advise you on the investigation, represent your company or yourself and defend your business.

VAT and PAYE inspections

If you are VAT registered or have payroll employees and operate PAYE, then it is not uncommon to be routinely inspected or audited. HMRC will review your records, processes and systems and they will target areas where mistakes are frequent.

Tax penalties

If anything of concern is found by the HMRC during the course of their investigation then they can, of course, impose penalties which often depend on whether the omission was declared voluntarily and the circumstances surrounding the omission.

Penalties are calculated using a pre-existing scale which takes into account the actions of the taxpayer. If the failure to disclose key information was deliberate, the penalty will be higher than perhaps an unintentional mistake.

Accountants and Tax Investigations

Accountants can help you with your tax investigation in several ways, these include:

  • We will advise you on the best way to respond to information from HMRC and outline what evidence that you need to provide
  • Helping you collect the required information for HMRC and ensuring that this information is correct
  • Responding to information requests
  • Monitoring the response times of HMRC to ensure that you are not waiting a long time for the issue to be resolved
  • Participating in negotiations for any final settlements such as interest and any penalties which may have to be paid
  • Negotiating with HMRC to arrange payment timescales

A tax investigation can be a worrying time and we try to minimise the disruption on your business by taking care of the investigation process. All you need to do is supply us with the information requested by HMRC and we will do the rest.

Find out more about how Mercian Accountants can help