A tax investigation by HMRC (Her Majesty's Revenue and Customs) is a process conducted by the UK tax authority to review an individual or a business's tax affairs to ensure they are compliant with the relevant tax laws and regulations. HMRC conducts tax investigations to identify any errors, omissions, or deliberate attempts to evade taxes.

The process of an HMRC tax investigation generally involves the following steps:

Notification: HMRC initiates a tax investigation by sending a formal letter, also known as a "Notice of Enquiry," to the taxpayer, informing them that their tax affairs are being reviewed. This letter will outline the specific details of the investigation, such as the tax years or periods under review and the information or documents that HMRC requires.

Information Gathering: Once the taxpayer receives the Notice of Enquiry, they are required to provide the requested information and documents to HMRC within a specified timeframe. This may include financial records, receipts, invoices, bank statements, and other relevant documents related to their tax affairs.

Examination and Interviews: HMRC will examine the information and documents provided by the taxpayer to verify the accuracy and completeness of their tax returns. They may also conduct interviews with the taxpayer or their representatives to seek further clarification or to gather additional information.

Decision and Outcome: Based on the information and evidence gathered during the investigation, HMRC will make a decision on whether the taxpayer's tax affairs are compliant or if any adjustments are required. If HMRC identifies errors or omissions, they may raise assessments for additional tax, penalties, and interest, which the taxpayer will be required to pay if deemed necessary.

Dispute Resolution: If the taxpayer disagrees with HMRC's decision or assessments, they have the right to challenge it through various dispute resolution mechanisms, such as submitting an appeal or going to tax tribunal.

It's important to note that tax investigations by HMRC can be complex and may involve significant financial and legal implications. It's advisable to seek professional advice from a qualified tax advisor or accountant if you are under investigation by HMRC or if you have concerns about your tax affairs.

Get in touch with Cheylesmore Chartered Accountants to support with your tax investigation.