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Check out the full self-assessment playlist:
https://www.youtube.com/watch?v=jcHIhlwQ-1s&list=PLd5lsoC3T-pZq8yupscg6826YenkPm5Mh
️ Timestamp:
0:47 – What exactly is an HMRC enquiry?
2:46 – What leads to an HMRC enquiry?
4:57 – 3 simple steps to reduce your risk of an HMRC inquiry.
With the upcoming implementation of HMRC’s ‘digitisation of tax returns’ changes, HMRC will have increasing capabilities to review UK self-assessment tax returns and find potential discrepancies or errors in each return.
The Taxes Management Act 1970 gives HMRC the right to examine personal and trust tax returns. This right applies to the original tax return and to any subsequent amendments to the return by the taxpayer and applies in all cases.
The vast majority of enquiries start because HMRC suspects there is something wrong with your UK tax return that their modern computer system and network can detect. In other words, either there is something on the tax return that is a cause for concern, or HMRC has information from other sources that conflicts with what is stated on the tax return.
Nudge letters are often used by HMRC to encourage taxpayers to check an entry, or lack of an entry, on a tax return in a particular area. Nudge letters are not an investigation in and of themselves, but if you do not address the requests or information in a nudge letter, there is a chance that HMRC may launch a formal investigation into your tax return.
If HMRC thinks something is wrong, it has 12 months from the date of your tax return to launch an official investigation into your self-assessment.
3 steps to reduce your inquiry risk.
1. Get it done on time. You have just over 9 months to file your tax return, so you have time to double-check anything that looks unusual.
2. Use the additional fields on the tax return to give HMRC further details about aspects of your return that may seem unusual, such as capital gains and property.
3. Be honest. The thought of reducing your tax bill can be very tempting, especially when certain large companies may not be paying the taxes they should be paying. However, we strongly advise you to be honest in your self-assessment. This will help you to trust your figures even if you are selected for a random inquiry.
We hope this video gives you an insight into how HMRC investigations work and brings you one step closer to knowing your numbers. Be sure to check out our full self-assessment playlist and get ready for January 31st. Thanks for tuning in, hit the like button and subscribe for more free quality advice from real qualified accountants.
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My team and I are dedicated to helping and supporting YOU to “know your numbers” so that you can make calculated and informed decisions in your business, company and personal finances that align with your definition of success.
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Our videos are intended to provide general guidance, training and empowerment to help you understand accounting, taxes and your numbers. They do not in any way constitute specific advice for your particular situation. My team and I would be happy to help you with your specific questions or accounting needs as part of a formal engagement.
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