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Types of HMRC Tax Investigation 

There are two subdivisions into which an HMRC enquiry can fall; aspect or a full enquiry. An aspect enquiry investigates only a section of the taxpayer’s finances, however, it can turn into a full enquiry if HMRC discovers that there may be more going on. 

Special Civil Investigations 

  • These are carried out by a dedicated HM Revenue & Customs department, looking at cases where there may be a considerable tax loss.  
  • Normally focus on cases where the tax fraud is suspected to be in excess of £500,000. 
  • There is a possibility of criminal prosecution. 

Civil Investigation of Fraud 

  • Similar to the Special Civil Investigations, these cases are for serious tax fraud with the expected tax loss thought to be between £75,000 to £500,000. 
  • Can be settled without legal prosecution if the individual makes a full disclosure of the tax fraud and it is agreed that the case is to be dealt with under the Civil Investigation of Fraud procedures. 

Corporate Tax Investigations 

  • Enquiries into a Company Self-Assessment Tax Return may be either in the form of an aspect enquiry or a full enquiry. 
  • This type of enquiry is normally dealt with by the local district by an Inspector with the necessary skills and experience. 
  • For owner-managed businesses, it is common for an enquiry to be opened into the director’s personal affairs at the same time as a company enquiry. 

Income Tax Investigations 

  • Enquiries into an Individual Self-Assessment Tax Return may be either in the form of an aspect enquiry or a full enquiry. 
  • This type of enquiry is normally dealt with by the local district by an Inspector with the necessary skills and experience. 

PAYE Compliance Reviews 

  • A review of the employer’s accounting records to ensure that it is complying with all its statutory obligations relating to PAYE and National Insurance. 
  • Such a review will include: 
  • Benefits in Kind (P11d) 
  • Status of workers 
  • Operation of PAYE 
  • IR35 

The review will take place at the business premises and will initially involve a review of the previous three years’ records. 

VAT Investigation 

  • Often, where tax fraud has been discovered, there will also be VAT Fraud. 
  • HM Revenue & Customs will also carry out VAT Inspections, which are a review of the business’s records to ensure that the business is complying with the VAT regulations. 

Status Enquiry 

  • A status enquiry will often fall as part of a PAYE Compliance Review. However with the recent inclusion of a box requesting details of income derived from services companies on the Self-Assessment Tax Return and a request on form P35 Employer’s Annual Return to confirm if IR35 regulations have been applied to all income from Service C. 

Do you need help with a tax investigation? Want us to take away the HMRC headache? Give us a call

Sam Jacka

Author Sam Jacka

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