Random Tax
Investigation

It cannot always be Random

A Random Tax Investigation is randomly performed on the tax return of an individual or business. It is commonly a full inquiry performed as a spot-check.

Random Tax Investigation

call us before its too late

Random Tax Investigations have become increasingly common in recent years as HMRC has increased its attention to potential tax avoiders. These Investigations are performed entirely at random on any given business, with particular emphasis targeted at higher risk tax areas/sectors to discourage negative tax practices and tax evasion. A typical target would be SMEs (Small to Medium-Sized Enterprises).

By utilizing a spot-check approach, HMRC can use Random Tax Investigations as a tool to evaluate tax returns across an areas/sectors of high risk and allows them to assess if the tax system is operating fairly. If you are subject to a Random Tax Investigation and find yourself overwhelmed, it is wise to seek professional tax advice. Tax advisors can help further explain matters and ensure you are in compliance with HMRC’s legislation and in turn that HMRC complies with the appropriate legal proceedings.

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We Are Professional Accountants, Tax Advisors and Business Consultants

Our team consists of highly qualified accountants, Ex HMRC Tax Inspectors and industry known business consultants

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Send our HMRC Tax Investigation Specialists a message, and we will discuss your case on the phone and provide you with vital information to help you before you decide to present your case to HMRC.

FAQs

We have tried to answer some of the frequently asked questions for taxpayers, individuals and businesses. However, if you need any further help or explanation, give our team a call for free advice.

HM Revenue and Customs frequently conduct investigations in the UK. It is an authorized inquest on your history of tax payments, and the severity of the inquiry will be entirely case dependent. Probes for tax investigations can be due to multiple reasons, such as:
  • Late filing of your returns
  • Your income has fallen by a significant amount
  • Inconsistencies between different returns
  • Incorrect information is given
  • A tip-off that HMRC has received
  • The result of a random check
HMRC are very disinclined to reveal any details, so finding out and identifying why the tax inquiry is taking place could be vital in helping you deal with it more efficiently.
Every case is different during a tax investigation, and depending on the facts of the individual case, this will vary and determine the time scale. For example, in certain situations, the HMRC might want to acquire documents and information up to 20 years, but it also may be a lot less depending on case facts. HMRC investigations are not only expensive, but they are also very time-consuming. This may cause a lot of everyday issues for most people, especially if HMRC want to investigate a number of years. Therefore, the taxpayer needs to find a solution quickly to avoid unpleasantly and over calculated assessments.
If you are under investigation, you should check your books and records and find out if there have been any anomalies or mistakes, resulting in additional tax liability. No tax inquiry is straight forward as it seems. It may start from a simple compliance check and, if not appropriately addressed, can turn into a full investigation. You should talk to your accountant or advisor and include any losses that you haven’t declared for the past years. Remember, if you do not cooperate with HMRC, they have the authority to make the best judgment assessment, which can be more than the actual tax you owe.
Penalties are calculated on several factors and relevant to the year, which is under investigation. For example, a tax penalty can range from 35% to 200% of tax payable for deliberate conduct. It will also depend on your cooperation with HMRC to provide information and calculate untaxed income calculations.
It depends on the scope of inquiry or investigation and the type of letter you have received. For example, simple compliance checks can be finalised in one or two meetings, whereas investigations like Code of Practice 9 may take eight months to a year to finish. If proper records are not available, time spent to collect information will add up to the investigation time. 

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