HM Revenue & Customs (HMRC) launched 1,007 prosecutions against individuals for tax evasion offences in 2018, leading chartered accountants Grunberg & Co has warned businesses and individuals about the potential damage of a tax enquiry.
The London firm of award-winning accountants has said that the high number of investigations for tax evasion tied into a general increase in tax enforcements launched by the authority for lesser offences as it seeks to close the UK’s £33bn tax gap.
Grunberg & Co pointed to several disclosure campaigns, in particular, as proof that HMRC is getting tougher on tax compliance.
Peter McMahon, Tax Partner at Grunberg & Co, said, “In the last few years we have seen the tax authority launch various campaigns to help them disclose unpaid tax, the industry has also seen an increase in investigations, which proves that they are taking a much stricter line with taxpayers.”
McMahon said that HMRC was enjoying greater access to peoples’ financial data thanks to the increased information sharing between the Government and banking institutions, while the taxman’s own Connect computer system meant that more records could be checked and flagged up. The UK also benefits from an automatic exchange of financial information between OECD countries.
“Tax evasion is illegal, but the UK tax system does allow for the careful management of assets and capital through the use of the intended tax reliefs on offer and this shouldn’t be discouraged,” said McMahon.
“Receiving a notification that you face an investigation can be a scary experience, but the reality is that HMRC can launch an enquiry at random without any grounds for suspicion should it wish in addition to targeted enquiries from the information it receives.”
With this being the case Peter said that it was important that people should seek out expert advice as soon as possible if contacted by HMRC. People must act quickly as HMRC usually asks for a response from taxpayers within 30 days.
McMahon added, “It’s important to seek out help early on if they can as this can often help to resolve matters quickly.”
However, he warned that depending on the type of investigation a person is facing, “it could take anywhere between three and 18 months to resolve. Some complex cases can even take years.”
To protect businesses and individuals against the ever-growing focus and activity at HMRC, Grunberg & Co offers its clients a specialist tax investigation service. For a relatively small annual cost, the future costs of an enquiry will be covered, which can amount to thousands of pounds.
“We have taken the sensible decision to take out a policy directly with insurers that protects our clients. This means that in the unfortunate event of being selected by HMRC for investigation, you can relax safe in the knowledge that there will be no additional accountancy fees to pay,” added McMahon.