All About Tax Investigations And What You Need To Do

What is a tax investigation?

Tax investigations are notorious for being bad news, but that is not always the case. Although tax investigations are often triggered by a suspicion of fraudulent activity or a discrepancy in your tax return figures, there are instances where tax investigations are carried out at random.

Most businesses may be familiar with routine tax audits and in more serious cases, a business may need to face a tax investigation.

Who carries out a tax investigation?

Tax investigations are carried out by HM Revenue & Customs (HMRC). When you are in the position of being investigated, HMRC will get in contact with you to let you know when you are going to be investigated and what documents you will need to provide them with. The information will come in a letter.

In the letter HMRC will tell you the nature of the investigation and why (if any particular reason) you are being investigated. Although, no reason has to be given to say why you are being investigated, however your accountant can explain to you why you are being investigated.

Reason for an investigation

Investigation can occur for a number of reasons. The main reason is if HMRC has a reason to suspect that you are hiding your income or not paying your taxes. You are more likely to get investigated if you:

  • Are in a HMRC target area
  • Are suspected of omission
  • File tax returns late
  • Have inconsistencies or significant variations between tax returns
  • Have costs that are unusually high for the industry you work in
  • Have a tip against you received by HMRC
  • Operate in a high risk industry that consists of regular cash payments

HMRC can also carry out investigation at random as a routine to make sure that businesses across the United Kingdom are being compliant to tax laws.

tax investigation

What documents are involved in a tax investigation?

Every tax investigation is different and will depend on the nature of the investigation and the type of businesses. There are generally two different types of tax investigations, aspect tax investigations and full tax investigations.

As the name implies, a full tax investigation will be an enquiry on all aspects of your tax returns and income. Aspect tax investigations focus on a certain part of your tax returns and income. If HMRC are concerned with a certain aspect of a tax return they will only investigate that aspect if otherwise prompted not to.

Before a tax investigation HMRC can usually ask you to submit all records maintained by the business for the year your tax investigation is taking place. Some documents that HMRC may request will include:

  • Bank statements
  • Credit card statements
  • Chequebooks and paying in slips
  • VAT records
  • Sales invoices
  • Job quotes or estimates
  • Payroll records
  • Purchase invoices and expense receipts.

Depending on the type of tax investigation, HMRC may request some of the following paperwork but not all listed above.

How long is a tax investigation?

Tax investigations will usually last between 3 to 16 months. The duration of a tax investigation will depend on the extent of the enquiry. For aspect tax investigations, it can go from 3 months to 6 months. Full tax investigations will usually last longer which is up to 16 months.

When you receive the initial contact letter from HMRC stating that you are to be investigated, it is best to respond within he given time frame to avoid further action from HMRC. If you don’t respond, they can issue a Schedule 36 FA 2008 information notice. This orders you to produce documents to HMRC and if this is not met, you will face a monetary fine.

Getting a tax investigations specialist

Tax investigations can be stressful for business owners. It is a good idea to get some professional guidance if:

  • You have never been through a tax investigation
  • Don’t know how to proceed after getting a tax investigation letter from HMRC
  • Need extra support and advice from a professional in taxation and accountancy

It is recommended to hire an accountant or if you already have an accountant to consult them about the upcoming tax investigation. Tax investigations can be resolved by trusted accountants. From there they will be able to professionally assess the situation and the extent of the investigation and will also be able to help you produce the correct documents and get through the entire investigation smoothly.

A lot of times there is nothing to worry about when it comes to a tax investigation. Making sure that you comply with tax laws and making sure that you file your tax returns on time will help to avoid another investigation.


The Reasons Essex Accountants Save You Money Are Numerous

Essex payroll accountants are trained to handle money in personal and business finances so that people get the most efficient results. Accountants save you money by applying their knowledge in regard to your handling of your money.

Accountants have a record of every transaction that you or your business make, and thus are able to offer advice on spending patterns and taxes. One of the most important areas where an accountant can be of assistance is with your taxes.

Taxes play an important part of every individual’s or business’s cash flow projections and you accountant can help you to manage how the money is handled in regard to taxes. There are strategies that can be employed by your accountant that will minimize your taxes.

Accountants save you money by helping you to organize your business in the most advantageous way possible. Forup and run your business as a Limited Liability Company, or an LLC, and your accountant can evaluate your business and advise you accordingly.

In addition, accountants save you money by analyzing your day by day activities and can identify buying and spending patterns that could possibly be improved and will make your business more profitable. Sometimes the day to day issues in a business leave little time for the business owner to analyze things, and that is where a good accountant can be of great value.

The accountant can look over the history of transactions and see where better efficiencies could be applied in order to save money. There are many other ways accountants can save you money, as that is what they are trained to do, and in general they are very knowledgeable and proficient.

Top Private Funding Advantages You Need To Know About



Obtaining a grant fund for your business often determines the success or failure of your project. Some people struggle because they don’t know the ins and outs of each type of fund and can miss out on something they never even knew they needed. There are different types of funds, but this article will be going over the advantages of grants and funds, more specifically, private funding and public funding.


Private Funding Does Not Need Multiple Approvals

Possibly one of the biggest advantages of choosing a private funding company is that the grant recipient normally doesn’t need to wait for multiple authorisations from an intrusive management system to receive their awards. This makes the waiting time a lot less strenuous and it is a quick option for those who need funding in the short term.


Applying for a Private Fund is Easier

Private grant funding has a simpler qualification process and can potentially be quicker for the recipient to obtain their awards as opposed to those of public grants. For instance, a private fund may not make it a requirement to have a lengthy proposal to receive the grant money, whereas public grants more often than not require a lengthy proposal and an in-depth explanation as to how you plan to use the funds in order to receive grant money.



Fewer Applicants for Private Grants

With fewer people applying for private grant funds, there is an increasing chance that you will receive a grant reward for your proposal. Public grants funding agencies receive many applications, but due to the nature of a public sector, only a select few can be chosen to fund.



Although private funds are the more intuitive way to go if you want a grant quickly, like anything, there are downsides. Since private grant institutions are not held accountable for their actions by other legislatures and voters, applicants may get turned away and face problems with project support. The institution also has no responsibility to tell you why they denied your proposal, which is a requirement for publicly funded grants.