HMRC ‘Check of Tax Position’ Letters

The HM Revenue and Customs (HMRC) ‘Check of Tax Position’ letter is a well-known nudge type communication sent by to individuals or businesses nudging them to get their tax affairs in order. It is typically sent when HMRC identifies potential discrepancies or requires further information to assess tax compliance. The frequency of these letters varies based on HMRC’s compliance activities and their focus on specific areas or individuals. The letter is sent directly to taxpayers who are being reviewed. If you receive a ‘Check of Tax Position’ letter, it is crucial to take it seriously and respond promptly ideally seeking professional assistance and representation from a tax lawyer.

We can help you understand the issues raised, gather necessary information, and ensure a comprehensive and accurate response to HMRC. Just book an initial conference with our leading tax counsel (former HMRC in-house tax barrister and Head of Indirect Tax Litigation at Deloitte and National Tax Litigation Director at PWC) and our Senior Partner who worked at KMPG, Goldman Sachs and ING Barings and is dual-qualified as a Barrister and Solicitor-Advocate. Both lawyers will be available to you at the outset in your first advice conference.

Our taxation practice is the foundation of the firm. Have a conflict with HMRC? Our tax team is composed of knowledgeable tax lawyers who can help you handle your tax issues. For the best outcome, our ex-HMRC lawyers will advise you on intricate tax laws. We have years of expertise in dealing with complex tax problems, including negotiating with HMRC and handling tax appeals before Tax Tribunals and in the High Court.

What is HMRC’s ‘Check of Tax Position’ Letter?

HMRC’s ‘Check of Tax Position’ letter is a demand for information from the taxpayer. It is part of HMRC’s compliance activities aimed at ensuring accurate tax reporting and addressing potential discrepancies. This letter signifies that HMRC is conducting a review of your tax position and may require additional information to assess your compliance with tax laws.

The letter will outline the specific issues under review and may request documents, records, or explanations regarding specific transactions, income sources, expenses, or other relevant details related to your tax affairs. HMRC’s objective is to verify the accuracy and completeness of your tax returns and ensure compliance with tax legislation.

Help with the ‘Check of Tax Position’ Letter

Dealing with HMRC’s ‘Check of Tax Position’ letter can be overwhelming, but our experienced tax lawyers are here to assist you every step of the way. Here’s how we can help:

  • Thorough Review and Analysis: Upon receiving the ‘Check of Tax Position’ letter, our team will conduct a detailed review of your tax affairs, including the issues raised by HMRC. We will analyse your records, transactions, and any relevant supporting documents to assess the accuracy and completeness of your tax position.
  • Expert Guidance and Advice: Our tax lawyers will provide you with personalised advice and guidance tailored to your specific circumstances. We will explain the legal aspects of the issues raised by HMRC and help you understand your rights, obligations, and options moving forward.
  • Communication and Representation: We will act as your representative in all communications with HMRC. Our team will draft responses to the ‘Check of Tax Position’ letter, ensuring that they address HMRC’s concerns adequately and in a manner that supports your position. We will handle all correspondence, negotiations, and discussions with HMRC on your behalf.
  • Dispute Resolution and Appeals: If disagreements arise during the ‘Check of Tax Position’ process, our firm has the expertise to handle disputes and challenge decisions made by HMRC. We will explore all available legal avenues to protect your interests and ensure a fair resolution, including appeals, negotiations, and alternative dispute resolution methods.

How to deal with a HMRC Tax Position Check?

If you have received a HMRC Tax Position Check letter, it means that HM Revenue and Customs (HMRC) wants to review your tax affairs. This letter is typically sent when HMRC has identified a potential discrepancy or inconsistency in your tax returns or other related information. Dealing with a Tax Position Check letter can be a bit stressful, but it’s important to respond promptly and provide accurate information. Here are some steps to help you handle the situation:

  • Read the letter carefully: Start by thoroughly reading the letter to understand why HMRC is conducting the review and what specific information or documents they require from you. Take note of any deadlines mentioned in the letter.
  • Gather relevant documents: Collect all the relevant documents that support your tax returns, such as income statements, expense receipts, bank statements, and any other supporting records. Ensure that these documents are organised and readily accessible.
  • Review your tax returns: Go through your tax returns for the relevant period and cross-reference them with the information requested by HMRC. Identify any discrepancies or errors that may have triggered the review. It’s important to be honest and transparent in your assessment.
  • Seek professional legal advice: If you’re unsure about how to respond or need assistance in dealing with the Tax Position Check, it may be helpful to consult a tax disputes solicitor. They can provide confidential guidance and ensure that your response is accurate and comprehensive. Advice from accountants or tax advisers is not confidential therefor eyou should appoint a solicitor.
  • Respond within the deadline: Adhere to the timeline provided in the letter and submit your response before the deadline. If you require additional time due to genuine reasons, contact HMRC and request an extension. Late or incomplete responses can lead to penalties or further scrutiny.
  • Provide a detailed and clear response: When responding to HMRC, be concise, factual, and address all the points raised in the letter. Include any explanations or justifications for discrepancies, providing supporting evidence wherever possible. It’s important to maintain a professional and cooperative tone in your communication.
  • Keep copies of all correspondence: Make copies of all the documents you send to HMRC and keep a record of your communication, including dates and names of HMRC representatives you speak to. This will help you in case of any future disputes or clarifications.
  • Follow up and be patient: After submitting your response, HMRC may take some time to review your information and reach a decision. If you don’t hear back within a reasonable period, you can follow up with HMRC to inquire about the status of your case.

Remember that each tax case is unique, and it’s important to tailor your response to the specific circumstances outlined in the Tax Position Check letter. If you’re unsure or overwhelmed, seeking professional legal advice can be invaluable in navigating the process effectively.

How much time do I have to respond to the letter?

The specific time frame for responding to a HMRC Tax Position Check letter should be mentioned in the letter itself. HMRC typically provides a deadline by which they expect to receive your response. It is crucial to adhere to this deadline to avoid any potential penalties or complications.

Remember, it’s crucial to respond within the provided timeframe or any agreed-upon extension to maintain a cooperative approach and avoid unnecessary complications in your tax affairs. We recommend seeking our professional assistance as soon as possible to ensure a timely response.

What happens if I don’t respond to HMRC’s letter?

Failure to respond to HMRC’s ‘Check of Tax Position’ letter can have serious consequences. HMRC may proceed with their assessment based on the information available to them, which can lead to additional tax liabilities, penalties, and potential legal action. It is crucial to address the letter promptly and accurately.

Handling the ‘Check of Tax Position’ process on my own?

Handling the “Check of Tax Position” process on your own is possible, especially for straightforward cases where you are confident in your understanding of tax laws and regulations. However, in more complex situations or if you are uncertain about your tax position, engaging a tax disputes solicitor can provide several benefits:

  1. Expertise and knowledge: Tax disputes solicitors specialize in tax law and have a deep understanding of the complexities of the tax system. They can navigate through intricate tax legislation, case law, and HMRC guidelines, ensuring that your rights are protected and that you have the best possible chance of achieving a favourable outcome.
  2. Strategic advice: A tax disputes solicitor can provide strategic advice tailored to your specific circumstances. They can analyse your case, identify potential weaknesses or areas of concern, and develop a comprehensive strategy to present your position effectively. They can also provide guidance on the best approach to communicate and negotiate with HMRC.
  3. Handling complex procedures: Tax disputes can involve intricate procedures and legal requirements. A tax disputes solicitor is well-versed in these procedures and can guide you through each step, including preparing and submitting documentation, responding to HMRC queries, and attending meetings or hearings if necessary. Their expertise can help streamline the process and ensure compliance with procedural rules.
  4. Representation and advocacy: In situations where the dispute escalates and legal proceedings become necessary, a tax disputes solicitor can represent you and act as your advocate. They have experience in presenting cases before tax tribunals or courts, cross-examining witnesses, and making legal arguments on your behalf.
  5. Mitigating risks and penalties: By engaging a tax disputes solicitor, you can mitigate the risks associated with non-compliance or inadequate representation. They can help you understand the potential consequences, navigate the negotiation process, and work towards minimising penalties, fines, or additional tax liabilities.
  6. Peace of mind: Dealing with a tax dispute can be stressful and time-consuming. Engaging a tax disputes solicitor can alleviate some of that burden. They can handle the legal aspects of your case, communicate with HMRC on your behalf, and provide you with peace of mind knowing that a qualified professional is advocating for your interests.

It’s important to note that hiring a tax disputes solicitor involves costs. However, considering the potential financial implications and the complexities of tax law, their assistance can be invaluable in achieving a favourable resolution to your tax position check. When selecting a tax disputes solicitor, it’s advisable to choose someone with relevant experience and a track record of success in handling similar cases. Be careful of using tax accountants or advisers who cannot provide a confidential legal service as they have no right to assert solicitor-client privilege to HMRC.

What if I don’t comply with the ‘Check of Tax Position’ letter?

If you fail to comply with a HMRC Tax Position Check letter, it can have serious consequences. HMRC has the authority to take various actions to ensure compliance with tax obligations. Here are some potential consequences of not responding to the letter:

  • Penalties and fines: HMRC may impose penalties and fines for non-compliance. The amount of the penalty can vary depending on the nature and severity of the non-compliance. The longer you delay or fail to respond, the higher the potential penalties may be.
  • Increased scrutiny: Non-compliance or failure to respond to a Tax Position Check letter can raise red flags and lead to further scrutiny of your tax affairs. HMRC may conduct a more detailed investigation into your tax records and transactions, potentially covering multiple tax years. This can be time-consuming, stressful, and may result in additional penalties and interest if irregularities are discovered.
  • Assumptions and estimates: If you do not provide the requested information, HMRC may make assumptions or estimates based on the available information they have. This can lead to a higher tax liability being assessed, as HMRC will not have the benefit of accurate and complete information from you.
  • Legal action: In extreme cases of persistent non-compliance or deliberate evasion, HMRC may take legal action against you. This can involve civil or criminal proceedings, which can result in severe financial penalties, potential imprisonment, or other legal consequences.

It’s crucial to take a HMRC Tax Position Check letter seriously and respond within the provided timeframe. If you are unable to comply or require additional time, it is advisable to contact HMRC as soon as possible to explain your situation and request an extension, providing a valid justification for the delay.

If you are unsure about how to respond or need assistance in dealing with the letter, consider seeking professional advice from a solicitor who can guide you through the process and help ensure compliance with HMRC’s requirements. Our law firm will work diligently to mitigate these risks and protect your interests.

Can I challenge decisions made by HMRC?

Yes, if you disagree with the decisions or assessments made by HMRC, you have the right to challenge them. Our tax lawyers have extensive experience in handling disputes and can assist you in navigating the appeals process and seeking a fair resolution.

Receiving a ‘Check of Tax Position’ letter from HMRC can be a stressful experience, but with the assistance of our experienced tax lawyers, you can navigate the process confidently and protect your interests. Our law firm is dedicated to providing expert advice, effective representation, and tailored solutions to address any issues raised by HMRC. Contact us today to ensure your tax position is accurately assessed and your rights are protected.

Expert Tax Investigation Lawyers

If you need HMRC Tax Investigation advice, we are available to aid you at every stage of the HMRC investigation 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].

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