For some time HMRC have been targeting Fish & Chip Shops generally and where information has become available that the "chippie" has been suppressing purchases - yes some people understate their tax deductible purchases - with the inevitable fraudulent larger suppression of sales HMRC have tended to adopt the Contractual Disclosure Facility - see http://www.wamstaxltd.com/SCI_or_CIF.html
Of course it is best not to have understated your profits in the first place but if you have the bad luck to get caught engage the services of a suitably experienced tax investigation specialist and remember the ground rules in any investigation:-
(i) If you think you have got things wrong
- Tell your specialist exactly what you know (and also what you think ) has gone wrong and don't keep anything back - He/she needs to know the whole facts and nothing worse than being caught out with being Spartan with the truth at a later date. Get as much down by way of notes in advance of chatting so that you do not miss out any material circumstance (as you see it). Then discuss how to proceed
(ii) if you think HMRC have got it wrong -
This can happen however be very careful as they will inevitably have researched matters in depth before opening the enquiry - then discuss with your adviser how you think matters could have been misinterpreted and discuss how to proceed.
(ii) Your tax adviser if experienced in tax investigation work should be able to relate practical examples of how matters could be resolved if you have provided everything honestly and openly and advise regarding the usual problems in investigation cases e.g.
Protecting your interests and reducing your stress
Disclosure or Non-Disclosure
Co-operation or Non-cooperation
Meetings or no meetings
Payments on account or Non-Payments on account
Providing documents requested - or managing unreasonable requests
Evidencing non-taxable receipts
Dealing with technical issues that arise
Protecting you against unnecessary and unwarranted HMRC intrusion
Negotiating settlements and penalties
and of course if it gets really serious
ensuring you do not miss any opportunity or time limits
discussing your interests and the strategy(ies) for resolving issues
writing up those complex COP9 reports to avoid prosecution - when you disclose all frauds and "irregularities"
Remember that just because he/she has specialist in front of his/her job name does not mean that his/her fees should be too high. A good specialist will save their fees many times over in worthwhile cases but preferably should be engaged at the initial letter stage
Ensure that you know and Don't be afraid to ask about fees.
Compare the quotes you get - remember to ask if the fee quoted includes VAT (that's an extra 20% to the bill when you least expect it) and whether there are other expenses to be taken into account for example - some will charge travelling time (I don't as a matter of interest) in addition to the normal out of pocket costs. Also ensure that you understand if the adviser wants a whack up front and exactly what that covers and if you will get timesheets showing the time devoted to your case and the charges. Also how and when payment is to be made. Ok you would probably do all these things if you were buying something from a shop but the wee brown (or now sometimes white) HMRC envelope has the peculiar habit of causing stress to otherwise careful and "canny" individuals.
Remember most of all don't panic or rush about like a headless chicken there are specialists for every discipline and you can see a selection by using the "FIND A PROFESSIONAL" tab on the www.taxationweb.co.uk
Always pleased to have a chat anytime (24/7) on 07751720507