How do I know if HMRC are investigating me?

Are you worried you’re being investigated by HMRC but haven’t been formally told you are?

In this article, we’ll address whether HMRC has to tell you they are investigating you, how you’ll find out if they are, why they may choose to investigate you, and what to do if you are being investigated.

Does HMRC notify you of an investigation?

Yes – when HMRC begins a formal investigation of your tax affairs, they will notify you. Usually this is done via letter.

You won’t know that you are on their radar as a potential investigation target before they begin the formal investigation and send the letter.

Why would HMRC choose to investigate me?

There are many triggers for HMRC investigations, including:

• Mistakes/omissions/inconsistencies in your tax returns.
• HMRC are targeting businesses in the sector you work in.
• Your financial data is drastically different to your industry average.
• Suspicious finances in your documents e.g. large transactions, large earnings loss.
• You have been flagged for monitoring because of late/failure to submit tax returns.
• Random selection.

Read more about your chances of being investigated by HMRC.

In their letter, HMRC will outline what they want to look at. You’ll learn if they are carrying out a full enquiry of your business records, an aspect enquiry (looking at a particular issue), or if they are doing a random check.

Will I know if HMRC wants to begin criminal proceedings against me?

You’ll be told that a criminal investigation has begun when you are:

• Asked by HMRC investigators to attend a voluntary interview under caution.
• Arrested.

Prior to this, you will be aware that HMRC are investigating you. The information they are asking for and your own understanding of your tax activities will be a good indicator whether criminal proceedings are likely. A tax fraud solicitor will be able to advise you where you likely stand.

What should I do if HMRC are investigating me?

If you’ve been told that HMRC are investigating you, you should seek legal counsel immediately. You’ll be covered by a legally-binding confidentiality agreement and they can instruct tax experts who will also be bound by this legal privilege. Together you’ll determine the best course of action.

HMRC will outline in their letter the purpose of the investigation and what information they need from you. You should ensure:

• You set aside an appropriate amount of time for liaising with solicitors, tax experts, and HMRC.
• Make plans for managing your business whilst you take extra time to organise yourself for the investigation.
• Ensure all of your records are easily accessible and organised (speak to your solicitor and tax expert about how many years worth of records you’ll need depending on your business).

Don’t waste any time if HMRC has notified you that you’re under investigation. Call the tax fraud solicitors at Holborn Adams today.

Holborn Adams