The HM Revenue and Customs, or HMRC, is the combination of Inland Revenue and HM Customs. Basically, all of the taxes and duties related to earning income as an individual and a business, and all taxes and duties related to running a business, are combined into one governing agency. The HMRC passes legislation that governs how, when, and on what people and businesses must pay taxes and duties. They also work to ensure that all laws are being obeyed through tax enquiries.
This merger of the two agencies into the HMRC has its up sides and its downs. One of the up sides is that you only have to deal with one agency for all of your tax and duty obligations. The biggest downside is that because of this you have the potential for more enquiries that extend into many areas of your tax and duty returns. For example, if you made a mistake on your individual self assessment forms but you also run a business, you could be subjected to tax enquiries into your business assessments as well as your personal assessment. For a business, a mistake on the employment section of the self assessment may cause a tax inspection into the duties you pay on VAT items. This increase in frequency and depth of tax enquiries has created a larger need for tax enquiry insurance and tax consultancy.
Inland Revenue used to do assessments for taxation of corporations based on information sent to them. However, HM Revenue and Customs now requires corporations and individuals for file a tax self assessment. These self assessment forms can seem complicated, but there are some easy steps that you can use to help you complete your return and file it in a timely manner.
If you receive a tax return from HMRC, you will need to first read the first two pages carefully. You will not get this paper statement if you typically file online or through a tax consultancy. You will need to make sure that you have all the forms that you need, and that you have all required documentation ready. The guide available from HMRC will help you to determine what documents you will need for the self assessment, as well as how to calculate the assessment. It is best to look at all of the information and make the calculations before you begin filling out the self assessment forms. Once you have all of the numbers ready, you can fill in the forms, and double check your work.
Always make sure that you have filled in all sections of the self assessment forms and attached any required documentation. You should also contact HMRC or other firm for tax advice to help you if you are unsure about anything. Even if you have the slightest doubt, hiring a tax professional can save you a lot of money over paying penalties and taxes later due to a tax enquiry.
Many people try to complete their own self assessment themselves, or in house in the case of corporations. However, it is vitally important that you seek assistance any time you may have a question about your self assessment forms. Even the slightest mistake can cost you a lot of money. With the merger of Inland Revue and HM Customs, there are a lot more tax enquiries taking place. If you are the subject of a tax enquiry, and you have made a mistake on your self assessment, you will not only owe additional taxes but will have to pay hefty fines as well.
There are many ways that you can get help with your tax self assessment. You can, of course, go to the HMRC for information and assistance with filling out the forms and getting answers to questions about tax law. This information is available by phone or over the internet, as well as through the publication of several tax law pamphlets. However, your best option is typically to go to a tax consultancy. While the HMRC can give you information, a tax consultancy can give you actual tax advice. This is often the better way to go, because you may find ways to save money on your taxes legally, whereas answers given by the government HMRC will likely leave you paying more money.
Dealing with tax HMRC enquiry on your own can be quite a challenge. The process will begin with an opening dialogue, usually in the form of a letter but sometimes as a telephone call, that will let you know an enquiry is taking place and what type of enquiry it is. This can sometimes be misleading, because aspect enquiries can quickly become a full enquiry if not addressed properly. The inspectors will then typically set up a meeting with you to discuss the mistakes on your self assessment. Typically, retribution is swift, and you soon find yourself paying penalties and extra taxes, even if the mistake was genuine.
Dealing with tax HMRC enquiry with the help of a tax consultancy is much preferred. These professionals understand tax law, and know what is and is not allowed by the HMRC. Unfortunately, as happens in many government functions, these investigators will get away with as much as they can if you deal with them alone. If, however, you have a professional by your side, you can be protected from unlawful interrogations. You will also be more likely to prevent an aspect enquiry from becoming a full enquiry. If, however, you opt to prepare your own self assessment forms, you can also opt for Tax Enquiry Insurance, which will offer you protection and guidance from professionals in the case of an enquiry.
Any tax enquiry is going to be difficult, stressful, and likely costly. However, there are two types of tax enquiries. The first is an aspect enquiry. This is an enquiry into one aspect of your self assessment, and does not typically require documentation for proof. Basically, when investigators do an aspect enquiry, they find something wrong with your tax return, tell you what the problem was, and proceed to charge you penalties and additional taxes. However, if you have a tax professional on your side, or Tax Enquiry Insurance, you can sometimes avoid the penalties and additional taxes by professionals using the HMRC investigator’s manuals against them.
A full tax enquiry is one where your entire self assessment is in question. These enquiries can go back several years, and are quite complicated. Full enquiries require complete documentation, business records, employment records, and proof of all deductions. These tax investigations typically result in multiple penalties and taxes, and can be very, very costly. Anytime you have a full tax enquiry, you should definitely get tax advice.
You should be able to determine the type of HMRC enquiry being investigated through the open dialogue stage of the enquiry. This may take the form of a letter or phone call. However, sometimes the dialogue is not clear, and you need to ask for clarification. Also, aspect enquiries can soon become full enquiries if you are not careful, so it is best to seek tax consultancy any time you have an enquiry.
A full enquiry is one of the most difficult and complicated things that you will ever have to deal with, especially if you are the owner of a business. This is because full enquiries typically cover more than just one tax self assessment. They also require a lot of documentation and evidence showing why you filed your self assessment forms the way that you did. In these cases, getting help from tax consultancy is highly recommended, otherwise you could really be taken to the cleaners.
The best way to deal with HMRC full enquiry is quickly and with full cooperation. If your records are as organized as they should be, this should not be difficult. Go you’re your past self assessments and make sure that you didn’t make any mistakes. When you walk in to the first meeting with the government HMRC after the opening dialogue, have all of your appropriate documents ready and organized. If you found that you did make a mistake, admit it readily and explain how the error occurred. When you present information in a timely manner and without malice, you present a picture to the investigators that shows you are an honest tax paying citizen. This will save you a lot of money and heartache in the future. Basically, by working quickly, efficiently, and cooperatively with a tax inspection, you will easily head off a more thorough investigation, which, in turn, will save you a lot of money in penalties and additional taxes.
All enquiries begin with an open dialogue. This usually takes the form of a letter that states what type of HMRC enquiry there is and why the enquiry is taking place. The letter may or may not list a time, date, and place for an initial meeting. If no meeting time is specified, you will receive a phone call to schedule the meeting and outline a time frame for the enquiry, including initial meeting, production of documents, examination of documents, and a discussion of findings. With a full enquiry, you should definitely cash in on any Tax Enquiry Insurance you have, and seek tax advice from professionals. It is always best to go into a full enquiry meeting with an agent!
The initial meeting will basically cover why the enquiry was opened, and give you the opportunity to make any declarations or statements. The nature of the business will be discussed, as well as what records are kept for the business. The meeting will result in a list of documentation that must be handed over to the inspectors. After the tax inspection, a second meeting will take place where you are notified of the results of the investigation. At this point you will learn what mistakes they want to claim were made, and what penalties will be charged, as well as additional taxes that may be owed. In most cases at least one or more tax disputes will be found, but if you have an agent to protect your rights you will likely be able to get out of the enquiry unscathed, unless you truly made an error.
HMRC aspect enquiries are not nearly as complicated and expensive as full enquiries. However, you can still expect some obstinence on the part of the investigators. This is why it is important to have Aspect Enquiry Cover from your insurance. This coverage will allow you to easily and cheaply secure tax professionals to stand up for your rights and protect you from unlawful taxes and penalties.
When dealing with HMRC aspect enquiries, you must understand that most full enquiries occur as a result of digging for answers for aspect enquiries. The best way to avoid full enquiries is to cooperate fully and quickly with the tax inspection to close the case as quickly as possible. This will prevent you, hopefully, from having to pay penalties and taxes beyond your means to pay. This will, again, be much easier if you have an agent to represent you.
Basically, an aspect enquiry is one that only investigates one aspect of your self assessment forms. For this reason, it is typically easy enough to determine if a mistake was, indeed made. If you made a mistake, you should own up to it immediately after discovery and take corrective measures. This will help you to avoid high penalties. If you honestly feel that no mistake was made, an experienced tax professional well versed in tax law will be able to help you protect yourself from unlawful taxation.
Aspect enquiries are typically not that big of an issue, and are quickly resolved. However, since the merger of the Inland Revenue and HM Customs, there are many more aspect enquiries being opened than in the past. Additionally, it seems that more and more aspect enquiries are turning into full enquiries, especially when the tax payer does not have an agent or tax consultancy working on their side. This is why Tax Enquiry Insurance is so vitally important!
The first thing that will happen with any of the HMRC enquiries is that you will receive a letter stating what type of enquiry is being opened and why. This letter will also likely give you a meeting date and time to meet with the investigators. Meanwhile, you will want to investigate the matter yourself to see if you have, indeed, made a mistake on your tax self assessment. If you are unsure about anything in the aspect enquiry notice, or if you cannot find any mistakes, you should get tax advice from a professional to help you fight for your rights during the tax inspection.
Since aspect enquiries rarely require documentation or records review, they are typically handled within one meeting. During this meeting, the tax disputes will be addressed and resolved one way or another. If you have a tax consultancy, you will likely have a better chance of getting out of the meeting without owing additional taxes or penalties.
There are many reasons to get help with a tax enquiry. The biggest reason is fairly simple and obvious to most people. The fact is, the HM Revenue and Customs inspectors are only out to get more taxes and money for the government. It is important that you have someone on your side that looks out for your rights, and makes sure that the inspectors are following the letter of the law. There are many ways that the inspectors may try to take advantage of your ignorance and the fact that you are alone in your HMRC enquiry. Don’t let this happen to you!
A good example is one man that had an aspect enquiry opened because he claimed the loft space of his home for business use on his self assessment. The investigators did not want to allow this claim, simply because the water heater for the home was also in the loft! The gentleman was facing hefty penalties for the mistake, as well as additional taxes going back several years. Fortunately, he was able to secure the help of tax consultancy and avoid the situation entirely.
Another good example of why you need help with aspect enquiries is that one company made an honest mistake, a typo really, on their self assessment forms one year. Because of the size of the corporation, the aspect enquiry was quickly shaping up to become a full enquiry that would have resulted in a lot of time and money being spent by the company. Thankfully, due to their Aspect Enquiry Cover, they were able to secure an agent and head off the full enquiry.
