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According to recent data released by Pinsent Masons, the international law firm, yield gained from increased enforcement activity by HM Revenue & Customs has increased during the last four years.

Figures for 2013-14 indicate that for every £1 spent by HMRC on the enforcement of compliance by large companies, £97 is collected by the organisation. Pinsent and Masons’ head of compliance and litigation, James Bullock, said:

“These numbers suggest that, for the foreseeable future, HMRC will be increasing investment in investigations as quickly as it can hire and train staff.”

In 2012 – 2013, for every £1 invested by HMRC, £87 was collected. In 2009 – 2010, each £1 spent by HMRC gained just £14 for the Treasurer, indicating a huge increase in yield, mainly due to investment by the government into increasingly efficient enforcement and compliance by HMRC. However, Bullock stated that although the increased yield is a positive step for both the government and HMRC, it is causing uncertainty for large and medium-sized firms which find themselves under investigation.

The number of cases awaiting Tribunal increased this year, rising to 27,246, with a 32 per cent increase in the number awaiting the Upper Tribunal. Most of the taxpayers involved have already paid the tax being disputed, which is causing problems for businesses, according to Bullock.

What to do if HMRC launches an investigation into your business

First off, don’t panic! Although an investigation is a serious matter and you must act quickly, don’t feel pressured into contacting HMRC until you have all the required information. An investigation is generally triggered by an anomaly, but can be due to errors or incorrect or incomplete information. Contact an accountant for advice if necessary and let them deal with HMRC on your behalf.

Types of enquiry

The three main types of enquiry are random, full and aspect investigations. A full investigation will examine the whole of your tax return, while an aspect enquiry will involve just one or possibly more areas. Random enquiries are usually conducted across high risk groups.

Professional help

It is advisable to hire an accountant prior to contacting HMRC. The organisation recommends hiring professional assistance if you are the subject of an enquiry. Once you are in contact with HMRC, you can ask any questions you may have about the investigation.

If you would like any advice regarding HMRC investigations, contact us.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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