What To Do If HMRC Investigate Your Business

Every business owner hopes that they are never investigated by HMRC, however it’s essential to be prepared if they ever come to investigate your business.

A willingness to cooperate will put you in good stead, and having a clear reason for their visit will ensure situations are resolved quickly.


Why Would HMRC Investigate My Business?

Here are some reasons as to why business owners might be investigated by HMRC:

  • You’ve been unprofitable for multiple years.
  • There are mistakes in your returns.
  • They suspect you are omitting income.
  • They undertake a random spot check.
  • They think your figures are out of sync with other businesses like yours.

As you can see, a visit from HMRC can happen even if you’re innocent on all counts and have nothing to hide. It’s worth remembering this, so as not to feel panic if they do investigate out of the blue.

Of course an investigation from HMRC can be one of the most stressful times as a business owner, and it can take up a lot of time – however the more prepared you are, the better you’ll feel about the visit.


What To Expect If HMRC Investigates Your Business?

HMRC will probably visit one of three locations:

  • Your business premises.
  • Your residential address.
  • Your accountant’s office.

On rare occasions they may invite you to come and visit them, but often they will send someone to visit you.

HMRC must explain what they plan to discuss with you before they visit. They will be bound to discuss whatever topics that they have mentioned to you beforehand.

HMRC will check many areas of your business, with some of the main areas being your returns, books, taxes and Self assessment returns.


How Should You Respond To An Investigation?

Despite the stress and time consuming nature of an investigation, you must work with HMRC and their visiting agent and not put stumbling blocks in their way.

Always give honest answers, that are to the best of your knowledge and ensure the information you share is as accurate as possible.

Most people get their accountant to provide the necessary information, however this can leave you with a big bill to foot because of the extra time that they spend on helping you in the investigation.

Any corrections that HMRC identify will need to be rectified within 30 days, therefore if there are any mistakes that you’ve made you won’t be punished on the spot – you’ll have time to bring yourself up to standard.

However if you have been negligent or intentionally fraudulent you’ll probably be hit with penalties and extra tax bills.

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