So what happens if a tax investigation doesn’t reveal anything? This article looks at the end of the investigation and what you should do if no further action is take
The end of tax investigation proceedings
Normally, the end of tax investigation proceedings involves feedback from HMRC about the results of their investigation. This can involve a number of different penalties:
- Fines for late payment of taxes
- Fixed percentage fines for any unpaid tax
- Repaying outstanding taxes
Other penalties can also be levied, based on:
- Deliberate fraud or tax evasion, such as concealing assets
- Failing to register for VAT when your company turnover reaches the required tax threshold
- Failure to register a new business
- Not keeping adequate records, such as indemnities or debt records
The fines can escalate from a percentage sum of your unpaid tax, all the way up to criminal proceedings.
What to do if nothing happens
You might find that no further action is taken as a result of your investigation. This could be because HMRC is satisfied that you’ve not failed to pay tax, or that you’ve proven you paid on time. In these situations, you might find that there are no fines or additional penalties to pay. While this can look like a saving for your business, you should still consider the cost of your time in dealing with the investigation, as well as any fees incurred from enlisting the help of an accountant.
You can use the aftermath of a tax investigation as an opportunity to assess the way you report your finances, and then take steps to ensure you avoid similar issues in future. This could involve not leaving tax returns until the last minute, or ensuring your financial information is organised and monitored well. Doing this can help you avoid violating different aspects of tax law, such as not providing the right evidence when filing your taxes.
Taking steps to improve how you manage taxes in your organisation can help to stop you from running afoul of HMRC in the future. It also allows you to identify and deal with any potential taxation issues, before they become a problem or a cause for further investigation.
How can FSB help with your tax investigation?
FSB provides automatic access to tax investigation advice and insurance as part of its Business Essentials package. This helps to protect you and your business if you’re subjected to an investigation by HMRC, covering you in the event of a routine investigation, or if a taxation issue is taken further.
The service provides access to a number of benefits, including:
- A tax advice helpline
- Cover up to £100,000 per individual claim
- Representation from former tax investigators, who will liaise directly with your accountant
- Tax investigation insurance – the policy covers any fees we’ve agreed with your accountant