HMRC Enquiries on the Increase

Tax investigations are on the increase

As things slowly return to ‘normal’ following the Covid 19 pandemic, HMRC enquiries are on the increase

According to Croner-i, the UK’s leading provider of online information, expert guidance, and tools for professionals, the number of insurance claims have increased by 60% in the last quarter, as HMRC increases enquiry levels into potential tax avoidance.

What are HMRC investigating at the moment?

While HMRC’s focus to date has been on abuse of the Coronavirus Job Retention Scheme (furlough), this last quarter has seen many more VAT, Corporation Tax and Income Tax enquiries open up.

In other news, HMRC have made their first successful challenge against an employer who made a claim for employees who were not on the company’s payroll submissions until after the cut off date. This has resulted in HMRC clawing back more than £20,000 of furlough support money paid out to two employees over the duration of the pandemic.

VAT enquiries have made the bulk of enquiries in the April to June period, although perhaps surprisingly there seems to have been a large number of dentists being investigated by HMRC’s counter avoidance teams.

We also expect an increase in investigations into research and development (R&D) tax relief fraud, following on from HMRC’s annual report which showed an estimated £469 million level of error and fraud!

What should I do if I have underpaid tax?

If you think you have overclaimed under the Coronavirus Job Retention Scheme, you should contact HMRC as soon as possible to repay any monies due and limit any penalties which might be imposed – you can access the rules relating to this on the Gov.uk website here:  https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back

If you have any questions about this article, or any other accountancy or tax enquiries, we’re the leading contractor accountants in Stockport, so please do not hesitate to contact us via all the usual channels and one of the team will be happy to help ????

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