If you are notified that your business has been reported for tax evasion the whole process can be incredibly stressful and daunting. It can have range of consequences both personally and for your business.
Many people make the mistake of reacting too quickly by contacting HMRC themselves, when they receive notification that an investigation has commenced.
If you find yourself in this position, it is important to immediately seek professional advice to give you the best chance of securing a successful outcome.
Put simply, if you’ve been reported for tax evasion someone has suspicions about whether your business is meeting its tax liabilities.
The government have a number of online facilities that allow members of the public to report people and companies for tax evasion.
This may be because they suspect someone is trading without being registered with the Her Majesty’s Revenue and Customs (‘HMRC’), or that they believe a business is not accurately declaring its turnover and expenses.
The report could come from an ex-employee with inside knowledge of how the company operates.
It could be a member of the public who thinks they have spotted a disparity between the lifestyle of someone connected to the company and the financial circumstances of the business.
In some cases, a competitor may report your business to the HMRC regardless of whether or not they have reasonable grounds to believe you are evading tax.
Whatever the reason, if HMRC believe that there may be grounds for suspicion, then they will likely launch an investigation into your tax affairs.
You will usually become aware that your business has been reported for tax evasion when you receive a letter from HMRC notifying you that an official investigation has commenced.
HMRC may then request further information from you or may seek clarification regarding the payment of VAT or duties on products that you import or export.
You will usually be given 30 days to respond to these requests before they decide to take further action.
You could also be invited to attend an interview by an investigator at HMRC regarding any activity that has given them cause for suspicion.
This may be regarding the initial report they received from a member of the public, or it may be as a result of subsequent investigations they have made into your tax affairs.
If they decide to launch a full investigation into your tax affairs it can last up to 2 years.
If you suspect you have been reported to HMRC or you receive notification from them, you should immediately seek professional legal advice. You should do this before you respond to their initial contact.
Your legal representative will consider any correspondence you have received from HMRC and provide advice accordingly. Should you be required to attend an interview, your solicitor will attend with you in order to protect your position.
If you are aware of any anomalies in your tax reporting or financial records it is wise to notify the HMRC inspector about them as soon as possible. Again, you should speak with your legal adviser about what may be the most appropriate course of action.
Penalties can be up to 100% of the tax evaded, and potential imprisonment in the more serious cases.
The experienced, professional team at Richardson Lissack is comprised of former Tax Investigators, civil tax litigation and white collar crime solicitors.
They understand how HMRC work, speak their language and can help remove some of the stress and uncertainty from the process.
If you believe you are being investigated by HMRC contact us today for discreet, confidential advice.