Investigations

[zedldieuk]

how many times can a person be under a tax investigation?
In the last 15 years my husband is on his 5th, they say it's a coinsidence, but i think theres more to it than that. They have found nothing as his accountant looks over his books and makes sure everything is in order.
Any replies would be grateful as it's starting to get me down too to see him so stressed.

[Bob Jones]

HMRC cannot ask a qustion these days without entering into an investigation. If your husbands affairs are unusually complex 5 investigations in 15 years would not be unusual. In a routine case 5 in 15 would be excessive. When I submit a set of accounts I identify any areas that may interest HMRC and offer explanations with the accounts in an attempt to avoid any enquiry. If HMRC have conducted full investigations in each case and found nothing wrong - or,say, questioned the same aspect every time and found nothing wrong there could be grounds for complaint. I have known cases being enquired into every year for a number of years - but simply because the complex nature of the case is such that there is a genuine reason to ask a question - which is where I came in - HMRC cannot ask even the simplest of questions without opening an enquiry although this was under review when I retired..

Bob Jones
Internet Taxation Ltd
bob@internet-taxation.co.uk

[wamstax]

If HMRC have found nothing in 5 investigations then you have to ask if these were Full Enquiries where they enquire into all aspects of your husbands tax returns and accounts or if one or more were enquiries into one or more specific points in his accounts or tax return.

I know exactly how stressful enquiries can be but if there is nothing for them to find then I would advocate full co-operation as the best way forward subject to making a complaint if enquiries are merely bringing out the conclusion that the return was correct in all respects. It has to be appreciated that under Self Assessment
(a) HMRC do not require to say why they are enquiring into a particular return and
(b)some returns are randomly selected to sort of police the system of enquiry work
(c) it would be unusual for your husband's return tobe randomly selected one year in three
(d) so that there might be a self evident reason for a particular aspect being taken up.

As Bob has said some practitioners go that wee bit extra and try and cut off the possibility of enquiry by highlighting particular items that might seem strange at first sight but are capable of simple straightforward exlanations. This can be a catch 22 situation however if you draw attention to something and the explanation is blatantly not correct.

Your professional accountant should have enough practical experience to guide you as to the likely situation that exists. However at the end of the day your husband is the only one who knows what exactly is or is not in the records and his accountant should have some idea if matters take too long to settle or if HMRC are conducting reasonable enquiries based on the risks obviously present in his client's affairs.

Errors in selection of cases can of course occur if proper use is not made of information previously supplied in relation to earler periods or matters and if this happens then your accountant should not be slow in bringing this to HMRC'sattention.
regards
bill@wamstaxltd.com
http://www.wamstaxltd.com