You’ll be investigated by the HMRC if they have reason to believe you could be guilty of a form of tax evasion (when someone avoids paying tax through illegal means).

There is a major crackdown on tax abuse. If something about your filed returns does not seem right to the HMRC, you will be investigated.

If the HMRC have a suspicion of tax fraud, they will let you know that they’re looking into your records. Should the HMRC need to conduct a formal investigation, you’ll be sent a letter.

If you use an accountant, they could be sent the letter.

You cannot stop the HMRC from investigating you. However, if you comply with them and give them all the information they need, it can bring the investigation to a swift conclusion.

When the HMRC has decided to look at your business as a whole, including but not limited to, historic records and specific employees of the organisation.

When the HMRC’s concern is limited to one aspect of your business, such as the most recently filed records, concerns about the sum of a recent purchase which is not consistent with how much your business is making (known has unexplained wealth orders).

Any type of tax that your business is eligible to pay could be subject of the investigation.

It’s very difficult to tell and is dependant on a variety of factors such as complexity of the case and size of the business.

The HMRC could request to see record of up to 20 years.

You will be invited to an interview. You are not legally required to attend except in specific situations.

Usually, you will have 30 days. You can get an extension.

If you are innocent of any wrongdoing, you will receive a closure letter. If they find you have paid too little or too much tax, it will be rectified either by you or the HMRC.

Depending on the seriousness of the crime, you could be asked to pay double the amount of the tax already due and / or could be sent to prison.

Accelerated Payment Notices (‘APN’s) were introduced in 2014 and are used by HMRC to claim upfront payments of tax held in tax avoidance schemes. The recipient is required to pay the amount of wrongfully avoided tax to HMRC within 90 days of receipt.

HMRC can issue an ‘APN’ either when a taxpayer has been involved in a tax avoidance scheme (disclosed under the Disclosure of Tax Avoidance Schemes ‘DOTAS’), received a Follower Notice (arising from their participation in the Scheme) or if caught by the General Anti Abuse Rule (‘GAAR’).

If you feel that the requirements have not been met, it is imperative that you make the representations within the specified period. Should HMRC not withdraw the ‘APN’, you will have 30 days from the date of their decision to pay the amount specified or the revised amount applicable. It is important to communicate precisely and clearly with HMRC when in receipt of an ‘APN’ and provide full details of your company’s tax situation. Always seek professional advice on the best way to proceed.

An ‘APN’ is usually issued in situations where the taxpayer has used a scheme to avoid paying the full amount of tax. You will be made aware of your forthcoming ‘APN’ either by receipt of a letter or a ‘Follower Notice’ from HMRC which is sent several weeks prior to issuing the ‘APN’ to you.

A Time to Pay (TTP) arrangement is a method that allows you to pay monies owed to HMRC in monthly instalments. Usually, this can last up to six months or a year, although longer periods can be agreed upon depending on your Company’s individual circumstances.

The long-term viability of the company is a crucial factor. Even profitable companies sometimes run into cash flow problems and in these cases a TTP proposal is more likely to be considered favourably.

If a company has tried to keep up to date with their tax debts, then again this is looked on positively.

The length of time for a TTP is usually less than a year but each one is set for a fixed period. In certain special circumstances it is possible to get a longer period but if this is necessary there may be other better routes to consider.

The full tax bill has to be paid plus interest, a TTP is a way of spreading its payment over a longer time.

The payment period must be a short as is reasonably possible
It will only be accepted in the case of financial difficulties and not because the company would like to use the monies for other purposes or any other reason.

HMRC will stick to an agreement if the company is delivering as agreed. However, if the terms are breached they do have the right to withdraw the agreement.

If during the arrangement the company’s financial position improves or deteriorates it is essential you notify HMRC immediately.

While a TTP will avoid late payment penalties, the company will still usually be liable for interest on the amounts outstanding. However, each case is assessed on an individual basis.

If your financial problems are HMRC related then a TTP could be the right solution for you. However, depending on the totality of the company’s financial problem, e.g. large debts with other creditors and matters relating to its ongoing viability, other routes will need to be taken.

It’s important you act fast.

After you have submitted a tax return you might well be reassured that there are statutory time limits set for HMRC to query them. However, the reality is that under certain conditions HMRC has considerable power to make what is known as a Discovery Assessment to see if there is additional tax owing resulting from errors in the return for extended periods of time.