Updated: 19th February 2021
Whenever you have dealings with HMRC, your best course of action is always to be as open, honest, and cooperative as possible. Individuals or business owners may be contacted by HMRC to let them know that they are carrying out additional investigations into their tax affairs, Self Assessment or company tax returns, or PAYE records. These are known as tax compliance checks and their primary aim is to ensure the correct amount of tax is being paid by individuals and companies alike.
HMRC carry out random spot checks to ensure quality standards are being maintained; therefore being selected for a tax enquiry does not necessarily mean you are suspected of wrongdoing. In some instances, however, HMRC will commence a tax compliance check if they have reason to believe you are paying the incorrect amount of tax, or if you repeatedly fail to submit your tax returns on time.
Regardless of the reasons behind the investigation, you must ensure you comply with HMRC’s requests and provide the information asked for. You will be sent an Information Notice which will formally tell you that an investigation is underway, as well as asking you to supply certain pieces of information. You will typically be given 40 days to provide this information and you are highly advised to do this whether or not you agree with the investigation.
Ignoring HMRC’s request or otherwise refusing to engage with them sees you risk a £300 fine plus an additional daily charge of £60 which can quickly mount up to a considerable amount of money. Providing false information or intentionally misleading HMRC in any way is even more serious.
Deliberately misleading HMRC, whether at the investigation stage or by way of supplying incorrect information on company accounts and returns, can come with severe consequences. Depending on the level of deception involved, directors could find themselves disqualified from acting as a company director for anywhere up to 15 years. Furthermore, they could be held personally liable for their outstanding tax obligations as well as additional fines and interest charges.
If your business is finding it difficult keeping up with its VAT, corporation tax, or any other HMRC liability, the very worst thing you can do is try to lie your way out of the situation. Providing incorrect figures to reduce your tax liability is illegal, and you could find yourself in serious trouble with the law.
Instead, you should discuss your problems with a licensed insolvency practitioner who will be able to assess your business and its financial situation, and provide you with sound and actionable advice. If your business is making enough money to generate a substantial tax bill, yet you are still finding it difficult to find the money to service this, then there is likely to be an issue with your cash flow and how the company’s funds are being managed.
If you are having financial difficulties with your company, contact Real Business Rescue today. You can arrange a free confidential appointment with one of our licensed insolvency practitioners at any of our 50+ offices located up and down the country. During the appointment you will be able to learn more about the various business rescue and recovery options available and understand the best one for your situation. Call our expert team today on 0800 644 6080.
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