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Time limits for HMRC tax investigations suggested

A law firm has suggested that HM Revenue and Customs should have a time limit for conducting investigations in order to encourage them to ensure that they are concluded or closed within a given period. The current situation allows HMRC to continue investigations for longer than law firm RPC believe they should, which can be […]

By Beverley Da Silva on 01 Oct 2015
Read time: 3 minutes

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A law firm has suggested that HM Revenue and Customs should have a time limit for conducting investigations in order to encourage them to ensure that they are concluded or closed within a given period. The current situation allows HMRC to continue investigations for longer than law firm RPC believe they should, which can be costly and worrying for those who are subjected to the process. The proposal is for a fixed cut-off point, after which any enquiry must be completed, preventing the sort of long-running review that has been seen in the past.

At present, taxpayers who feel as though the process of investigation has been dragging on longer than necessary have little recourse other than applying to the tax tribunal. However, this is usually the last resort for those who have been involved in enquiries which have taken years to conduct and reach any form of conclusion. There are also concerns that the incentive for the tax office to complete an investigation i.e. the ability to demand payment of any outstanding tax owed, has been removed with the introduction of Advanced Payment Notices which means that the bill is issued up front and only refunded if the investigation deems it appropriate. If anything, the fact that the department will often already have any disputed sums in their account means that they are in no rush to complete even the most complex and long-winded investigations.

The fact that nearly 25 per cent of the investigations that are undertaken by HMRC’s local offices had yet to reach a resolution within a year of their commencement suggests that RPC may have a point. They have also cited the fact that, of the 115,000 compliance cases which are currently underway, more than 3,800 of them have yet to reach a resolution three years or more since they were originally started.

The idea of introducing a time limit for concluding this kind of investigation would minimise the costs, disruption to business and personal stress for those involved, for whom the admin alone can prove a considerable burden. When you factor in the fact that HMRC are typically unable or unwilling to give any indication of how long the investigation will take and those under scrutiny cannot be sure that they won’t be pursued for more tax at the end of the process, the sort of timescales that are currently accepted make life understandably difficult for the taxpayers involved.

For anyone who is keen to ensure that they are minimising the risk of being investigated by HMRC, using a specialist contractor accountant is the best way to keep on top of your finances. Our friendly and experienced team have plenty of experience handling the finances of those who work for themselves and are able to offer advice and information about the best way to organise your finances in order to save money and avoid difficulties. For more information about our packages and the services we offer, call today on 01253 362062 or email us at contractoradvice@nixonwilliams.com.

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We will never share your data with anyone without your permission. Read our Privacy policy to see how we use your data.