How to Handle a Civil Tax Investigation

Civil Tax Investigation

If you receive a notice from the HMRC that they are beginning a civil tax investigation into your business, it can be scary. You may not know what to expect or what you need to do. Don’t worry, in this blog post, we will discuss what happens during a civil tax investigation and how you can protect yourself and your business.

What is a civil tax investigation?

A civil tax investigation is an enquiry into your affairs to check that you have paid the right amount of tax. HMRC may open a civil tax investigation if they suspect that you have deliberately not paid all of the tax that you owe, or if they think that you have made a mistake on your tax return.

What happens during a civil tax investigation?

During a civil tax investigation, HMRC will look at your financial records and ask you questions about your income, expenses, and any other information relevant to their enquiry. They may also speak to your bank or other financial institutions to get more information about your finances. You should cooperate with HMRC during their investigation and provide them with any information or documents they request.

How can I protect myself and my business during a civil tax investigation?

The best way to protect yourself and your business during a civil tax investigation is to have good record-keeping practices. You should keep records of all of your income, expenses, and other financial transactions. This will help you to defend yourself if HMRC questions any of your deductions or claims. You should also seek professional help from an accountant or tax adviser if you are being investigated. They can help you to understand the process and what you need to do to protect yourself.

Don’t panic

If you receive a notice from the HMRC that they are beginning a civil tax investigation into your business, it can be scary. The first thing you should do is seek professional help. A civil tax investigation is different from a criminal tax investigation, and you will need to know how to handle each type of inquiry appropriately. Once you have sought professional help, the next step is to gather all of the relevant documentation that the HMRC has requested. This may include bank statements, records of income and expenses, and correspondence with the HMRC so you can present your case in a clear and concise manner and to enable HMRC to fully understand your position. It is important to remember that during a civil tax investigation, the burden of proof is on you, the taxpayer. This means that you will need to provide evidence to support your claims.

If you are able to successfully defend yourself during a civil tax investigation, the HMRC may drop the case entirely. However, if they believe that there is enough evidence to proceed, they may assess a civil penalty. This penalty is usually much lower than the amount of taxes owed if you were found guilty of tax evasion.

Contact Richardson Lissack if you need help with any civil tax investigation matters. They can provide professional, experienced and discreet advice and help you negotiate a HMRC civil investigation. 

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