Tax Investigations

HMRC has lost many staff over recent years and will continue to do so. However, this loss of personnel is more than compensated for by increases in the level of powers of HMRC and the information available HMRC. Many officers of HMRC appear to believe their powers are now unlimited while the organisation itself attempts to find new ways of circumventing the few remaining restrictions on its powers imposed by Parliament.

HMRC has spent considerable sums on information systems to acquire the so called Big Data. The use of this Big Data will increase substantially and many investigations will be opened in consequence. Data will be collected both in the UK and overseas from multiple sources. HMRC has access to a surprisingly wide range of databases and statistical analysis will automatically draw inferences from the data collected.

The probability of an investigation of one form or another will increase. The onus will, in practice, inevitably be on the taxpayer to prove innocence contrary to the legal position. It will be very difficult to convince HMRC the data is wrong even though experience of it so far has suggested this will frequently be the case. A robust defence will be required. Increasingly draconian penalties will be sought by HMRC to settle cases in the absence of a suitable defence.

Fee Protection Insurance

Appropriate representation should be sought as soon as there is any suggestion of any form of action by HMRC.

Dispute resolution

It isn’t always possible to reach agreement with an investigating officer for a variety of reasons. Disputes can spiral out of control and clients may find themselves at a tribunal hearing with the attendant costs when such a hearing could have been avoided. Alternative Dispute Resolution is often a cheaper and simpler means of resolving a dispute with HMRC. However, even this relatively informal process should not be undertaken without advice. 

Offshore Investigations

The introduction of the Common Reporting Standard will ensure HMRC have far more information from overseas and will initiate many more enquiries as a result. Under this initiative, the financial institutions of over one hundred countries will automatically send information to HMRC in 2017 and subsequent years.

Suspected Serious Tax Fraud

Immediate action is required whenever such an allegation is made. Any affected person should seek the advice of a person experienced in this field. Advice from persons outside this highly specialist area may make matters worse. 

Voluntary Disclosure

HMRC are generally more forgiving to those who bring errors to their attention so voluntary disclosure is often better than waiting for HMRC to enquire. A voluntary disclosure must be well organised and carefully managed so is not a matter for the inexperienced. The introduction of the statutory requirement to correct any errors arising from overseas income or gains should be borne in mind.  Penalties of 300% may be levied in certain circumstances. A Worldwide Disclosure Facility will be available until 30th September 2018.  It may be best to take advantage of this facility as it is likely to be the last of its kind.

Expert Witness Service

MHA MacIntyre Hudson is fortunate enough to have many staff and partners of many years experience who can provide authoritative expert witness services. Expert witnesses are available in a wide variety of fields including valuation and forensic accounting.