Enquiries often involve a detailed examination of a specific item on a tax return whilst others may extend to a full review of an individual’s personal affairs.
We have experienced a number of enquiries asking for evidence to support the numbers reported on a tax return. A full investigation can involve protracted correspondence with HMRC and a recent example went over a 2 year period where HMRC asked for worldwide bank statements and credit cards to evidence lifestyle.
Case Study: Declared Information
HMRC considered they had information to suggest a client had not declared all of their income. They launched an enquiry and refused to tell the client what information they held. The enquiry lasted for over 3 years and cost over £11,000 to deal with.
It turned out HMRC’s information was incorrect, but the accountant’s fees were still settled under the Tax Investigation Service.
Case Study: Capital Gains
A client returned a capital gain on their tax return and HMRC wanted to check a valuation included in the calculation of gain. They asked for a whole host of information – including some they were not entitled to!
With the assistance of a professional advisor HMRC were only sent the information necessary and the valuations were eventually agreed after corresponding with the valuations Office.
This work cost over £9,000 which was paid under the Tax Investigation Service. The enquiry lasted over 12 months.