Despite the ongoing coronavirus (COVID-19) pandemic, it is clear that HMRC will continue to pursue tax investigations and seek the enforcement of tax debts. It is therefore important to be fully informed as to the approach that HMRC will be adopting during this time of widespread uncertainty.
How will HMRC change their investigations during Covid-19?
While HMRC will continue to investigate tax debts during the COVID-19 pandemic, it has been reported that in some cases HMRC will not request (or reiterate requests previously made for) further documents or information from taxpayers during the lockdown. In other cases HMRC may temporarily suspend inquiries.
HMRC have also confirmed that they will continue to send out letters during lockdown to some taxpayers who are facing the controversial loan charge, some of whom will need a respond to HMRC within 30 days.
Why have HMRC changed their approach?
HMRC’s main priority at this time is to protect individuals, businesses and the economy and therefore has prioritised work that will support businesses. Furthermore HMRC now has a lot of extra work as they implement the Government’s furlough scheme.
Similarly to many other UK businesses, it is also likely that HMRC have a reduced number of employees due to the pandemic and therefore, by shifting their priorities will be able to deal with the work load more effectively.
How have the tax tribunal adapted to COVID-19?
The main changes that the First-tier Tax Tribunal in light of the Covid-19 crisis are:
- extending the circumstances in which the tribunal can make a decision without a hearing;
- extending the circumstances in which the tribunal can direct that a hearing be held in private. (thereby enabling the tribunal to conduct video or telephone hearings, which would otherwise be regarded as private hearings, in many more cases);
- allowing the use of electronic bundles of documents during tribunal hearings; and
- requiring recordings to be made of any video or telephone hearings.
There will now be no physical in-person hearings to take place. Hearings will only take place by video or telephone where electronic bundles of documents will be used. The decision to extend the circumstances for on paper sessions to be made will also allow more cases to be decided on paper and therefore reduce the number of hearings.
Similar changes have also been made to the Upper Tribunal with the default position being that hearings will be conducted by video. Parties are also able to apply to adjourn a hearing to a date when it will be possible to hold a physical hearing.
How will you know if you are subject to a HMRC investigation?
HMRC will notify a taxpayer in writing when it commences to examine their tax affairs. Typically, if HMRC starts a formal civil investigation, a letter will be sent requesting more information. For example, a taxpayer may receive a request for information on a property transaction or further information about a tax return from a local compliance audit.
However, if HMRC suspects criminal VAT fraud or high amounts of tax evaded then it may commence criminal investigations. Typically, unlike for a civil investigation, HMRC are unlikely to notify you at the start of the process but instead you will either be informed once you receive a letter requesting attendance to a voluntary interview under caution or when you are arrested.
It is crucial that, once under review, specialist Tax Investigation Lawyers are instructed. We regularly liaise with HMRC at formal meetings, agree what the scope of the disclosure should be and prepare the report on your behalf and reach a civil settlement with HMRC. We have wide-ranging experience in assisting those facing a COP 9 investigation whilst helping to navigate the rigid time-limits and strict rules.
How long will a tax investigation last?
It depends on the scope and nature of the HMRC investigation. The opening letter issued by the HMRC is usually a good guide on the potential length of any investigation. Some tax investigations finish after one letter; other investigations can take months with HMRC consistently requesting more information; and some investigations can be extending to longer than a year if involving complex tax structures or large businesses.
It is important to engage professional advice early on to minimise the length of any investigation as we identify any problems quickly and efficiently to get to the heart of the matter.
Expert London Tax Investigation Lawyers
If you need HMRC Tax Investigation advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation.
Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability.
We provide urgent advice and representation to clients from our unique expert team of established Tax and Duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [email protected].