UK: Taxpayer alert: Dire warning issued as Government begins investigations.

As published on express.co.uk, Monday 22 June, 2020.

Figures show that HMRC conducted 337,000 tax enquiries last year, with 105,000 in the first quarter of 2020 just as lockdown began. At the same time, Chancellor Rishi Sunak has introduced new legislation that allows the authority to target businesses or individuals who wrongly claimed coronavirus support payments.

These include payments made through the Furlough Scheme and the Self-Employment Income Support Scheme.

Tax enquiries can involve HMRC demanding data, visiting business premises and even interviewing company directors.

A failure to comply with tax enquiries, for example by choosing to ignore data requests, can result in a fine.

Pfp, who specialise in tax investigation insurance, said the enquiries help to prove that people have underpaid tax.

The company said an enquiry can be prompted by something as simple as a mistake being made on a tax return.

If HMRC finds any evidence of tax evasion during its enquiry then it will likely launch a full-blown investigation which will look into a taxpayer’s affairs more broadly, such as tax returns from previous years.

PfP added that prior to an enquiry, HMRC will likely have already collected some information on a taxpayer.

The company warned that HMRC often uses ‘open source’ material available on the internet such as social media platforms, blogs, websites and Companies House records.

The body, PfP warned, can review a taxpayer’s affairs from up to 20 years ago in cases where fraudulent activity is suspected to have taken place,

Kevin Igoe, Managing Director at PfP, said: “With so many tax enquiries being completed, we can assume HMRC has plenty that it will turn into full blown investigations now that lockdown is ending.

“The highest number of enquiries completed in the last year took place between January and the end of March, as the coronavirus crisis started to take hold.

“However, HMRC has since reallocated a large amount of its compliance resources to focus on administering COVID-19 schemes, such as the furlough scheme.

“This means taxpayers now have some breathing space to review their affairs and correct any mistakes.

“These enquires may seem fairly innocuous in some cases – starting with a data request or a phone call.

“However, taxpayers need to know that if HMRC is conducting a check then it already has them on a list of targets and is looking for evidence to confirm its suspicions.”

Following an enquiry into a taxpayer, a final notice is issued which will set out any extra tax that is owed, impose a penalty or outline HMRC’s next action, such as a full investigation.

Payment of additional tax owed must typically be paid within 30 days, along with any interest from the date the tax was originally due.hm

Penalties can also be issued on top of this and can be up to 100 percent of the amount of tax owed.

Carey Olsen and Alter Domus su…