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What Does a Tax Investigation Specialist Do?

What Does a Tax Investigation Specialist Do?

HMRC conduct tax investigations to ensure compliance with tax laws and to uncover any discrepancies or potential fraud. The prospect of a HMRC inquiry can be daunting, often causing significant anxiety and stress. This is where the expertise of a tax investigation specialist becomes invaluable with their expert knowledge of navigating the intricate procedures and demands of tax investigations. A tax advisor can effectively manage the situation, ensuring the representation process runs smoothly and resolving any issues with minimal disruption. In this blog, we will explore the essential role of tax advisor, detailing how they assist individuals and businesses in facing tax investigations with confidence and proficiency.

What is a Tax Investigation?

A tax investigation is a thorough examination by HMRC to ensure individuals and businesses comply with tax laws and accurately report their financial affairs. HMRC undertakes these investigations to detect and address any discrepancies, errors, or potential fraud in tax returns, safeguarding the integrity of the tax system.

Common triggers for tax investigations include;

  • discrepancies in submitted tax returns, such as mismatched income and expense reports
  • unusually large cash transactions
  • significant changes in income
  • and information received from third parties that contradicts reported figures.

By conducting these investigations, HMRC aims to maintain fair tax practices and deter tax evasion, ensuring that everyone pays their fair share of tax.

The Role of a Tax Investigation Specialist

A tax advisor plays a crucial role in guiding individuals and businesses through the complex process of a HMRC investigation. Their primary responsibilities include:

  • liaising directly with HMRC on behalf of their clients
  • preparing and organising all necessary documentation
  • and representing clients in meetings and communications with tax authorities.

These specialists possess deep knowledge of tax laws and investigation procedures. This enables an advisor to provide accurate advice and strategic planning throughout the investigation. Their expertise is instrumental in mitigating potential penalties, negotiating settlements, and ensuring that all tax reporting is accurate and compliant. By handling these critical tasks, investigation specialists help alleviate the anxiety associated with HMRC enquiries, protecting their clients’ financial interests.

Engaging an Expert in Tax Investigations

Tax enquiry and investigation specialists offer a comprehensive range of services. These services are designed to navigate the intricacies of tax investigations, seeking to obtain favourable outcomes for their clients. A tax investigation advisor will over services for dealing with HMRC enquiries, managing VAT investigations, and handling offshore income disclosures. For instance, when faced with an HMRC enquiry, a tax advisor will meticulously review the client’s tax returns, prepare necessary documentation, and communicate directly with HMRC to clarify any discrepancies. In the case of VAT investigations, the advisor will ensure that all VAT records are accurate and defend clients against any unjust assessments or penalties. For clients with offshore income, an advisor will manage disclosures to HMRC, ensuring compliance while minimising potential fines.

What Are the Different Types of HMRC Enquiries?

There are multiple types of enquiries which are issued to taxpayers by HMRC. These enquiries may take one or more of the following forms.

Section 9A Inquiry (S9A)

S9A enquiries (Section 9A of the Taxes Management Act 1970) are opened when HMRC suspects a loss of tax due to fraudulent conduct.

Schedule 36 Information Notice

Schedule 36 Information Notices are formal requests for information, documents, or records from taxpayers or third parties relevant to a tax inquiry or investigation.

Code of Practice 8 (COP 8) Investigation

COP 8 investigations are undertaken in circumstances where HMRC have reason to believe that a taxpayer may have participated in tax avoidance or aggressive tax planning schemes.

Civil Investigation of Fraud (Code of Practice 9)

A Code of Practice 9 investigation (COP 9) is typically opened when HMRC has strong suspicions that serious tax evasion or fraud has been committed.

Regulation 80 Determination

Regulation 80 of the Income Tax (Pay As You Earn) Regulations 2003 allows HMRC to issue determinations of tax liabilities in cases where they believe an employer has failed to deduct the correct amount of PAYE tax from employees’ earnings.

Discovery Assessment

A Discovery Assessment is issued upon the discovery of previously undisclosed tax liabilities. This may occur when HMRC identifies errors or irregularities in a taxpayer’s tax affairs, allowing them to assess tax going back several years.

Defending Your Tax Position

Tax investigation specialists play a vital role in navigating the complex and often stressful circumstances of HMRC investigations. Their expertise in managing enquiries, preparing necessary documentation, and representing clients in communications with HMRC is invaluable. A tax investigation expert can help mitigate penalties, ensure accurate tax reporting, and provide strategic advice tailored to each client’s unique situation. Input from a qualified tax advisor is crucial for anyone facing an HMRC investigation, ensuring a smooth and effective resolution.

How We Can Help

If you’ve received an enquiry from HMRC, we can help. WTT specialises in managing both current and historical tax investigations, with extensive experience in handling HMRC contractor related HMRC enquiries. Our expert tax advisors take charge of all correspondence with HMRC, challenging the basis of their assessments and providing necessary documentation and evidence to protect your interests. By responding on your behalf, we aim to identify any inconsistencies and develop strategic arguments to challenge HMRCs assessment.

Our services encompass managing a wide range of notices and enquiries, including S9A Notices, Schedule 36 Notices, APN Representations, Discovery Notices, Closure Notices, Reg 80 determinations, IR35 enquiries, and MSC assessments. With our expertise, we ensure that your tax matters are handled efficiently and effectively.

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