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2011 PAYE Update – Tax Enquiries

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Increasingly, HMRC is issuing formal queries when a few years ago it would simply ring up the employer.

In most cases, this is nothing to be worried about. The matter is addressed simply by passing the letter to us for a reply. Some of these letters can look formal and even intimidating. In most cases, we can deal with the matter quite easily for you.

There are things you can do to avoid having enquiries raised and to help us to deal with any enquiries that do arise:

  • keep your accounting records up to date
  • keep a separate note of any unusual transactions, such as disposal of a business or discontinuance of a product line;
  • compare your figures for the current year with those for the previous year, and understand the reason for any large variations;
  • calculate the common accounting ratios for the current year and the previous year. Know the reason for any large changes;
  • possibly, compare your gross and net profit margins with those for your industry sector, and understand any significant variations.

We can help with any of these matters.

Some enquiries are generated on a random basis. Other enquiries are caused as part of a campaign to investigate a particular business sector. So an enquiry does not necessarily mean that you are suspected of a tax offence.

HMRC have fearsome powers that can be used if they do suspect an offence. Last year, it was held that they could enter your premises without warning and take away all your computers. Their powers can be equivalent to, or even greater than, those of the police.

If you believe you may be investigated for a possible serious offence, it is essential that you contact us as soon as possible. Although HMRC’s powers are wide, they are not unlimited. There have been instances when they have exceeded their powers. In such cases, we can take action for you.