Having a tax compliance check can be daunting, stressful and even make you feel as though you (or your agent) has done something wrong. You will be pleased to know this is not the case.
HMRC will often check to ensure you as an individual or your company is paying the correct amount of tax. The below briefly overviews what can be check and what happens during a check.
What HMRC can Check:
HMEC will write or phone to say what they want to check ahead of any check being completed. This could be related to:
- Any taxes you pay as an individual or business.
- Any accounts and tax calculations.
- Details on your self-assessment tax return.
- Details on your company tax return.
- Any PAYE records and returns if you employ people.
- Details on your VAT returns.
If you use an accountant, HMRC will contact them directly as they are authorised to deal with this on your behalf. Your accountant should inform you of this compliance check and talk you through the next steps.
What Happens During a Check:
HMRC may visit your home, business, or your agent’s office. Alternatively, HMRC may ask you to visit them. During the visit, your accountant or legal representative can attend and it is recommended you invite them.
If you refuse a visit, refuse to attend HMRC, or refuse to provide the relevant information within their time frames – you may be issued with a penalty. The penalty can be mitigated if you have a reasonable excuse. For example:
- You are seriously ill.
- Someone close to you has died.
You can request the check is stopped by writing to HMRC with you reasons why. If you do not agree with HMRC’s decision, you can apply for alternative dispute resolution.
After the Check:
HMRC will write to tell you the results of the check. You’ll be:
- Repaid if you have overpaid too much tax. You may also get interest on the amount you are owed.
- Request payment for additional tax owed which will be due within 30 days. You will normally have to pay interest from the date the tax was due.
You may also have to pay a penalty. HMRC will look at:
- The reasons why you underpaid or overclaimed the tax.
- Whether you told HMRC as soon as you could.
- How helpful you have been during the check.
If you have a problem paying, tell the officer dealing with the check. You can also appeal a tax decision if you disagree with it.
