Simple question on a tax investigation

[dippy]

My wife runs a small self employed business with t/o of approx £120k. She became registered for VAT 3 years ago. In January she was told that she would be subject to a local office full enquiry. We contacted out accountant straight away. Provided all the books and records for the year in question and answered the inital questions.
On Tuesday my wife went to the IR with her accountant for a 2 hour inital meeting. Yesterday Customs contacted her to ask to do a full on site VAT investigation.
The simple questions are;
1. Are the two linked?
2. Is it normal for full enquiries by the IR to also include a VAT inspection?
Thanks

[jamesconstantine]

Hi

you should be aware that since April, C&E and IR have been merged. This makes it easier to have access into one another's computers as well as exchange information. We are not yet fully aware of the changes to the taxman's everyday practices and the impact on taxpayers as a result of the merger, only time will tell . What we know for sure is that things are not going to be the same as a result of recent changes including the merger, money laundering regulations (tax evasion is now a reportable criminal offence on grounds of suspicion) and so on. So, it will not be business as normal! In my opinion the only way for businesses to stay in line with the law, steer away from trouble and still secure maximum tax advantages is though efective tax planning of one's affairs well in advance.

James Constantine
Chartered Certified Accountant
http://www.taxadviceuk.com
Is your business tax-proof? Find out with our Unique Tax Savings Analysis.

[dippy]

Thanks for your reply.
The VAT inspection is approx 3 years from the date of 1st registration and is supposedly routine. The revenue are releasing my wifes records for the VAT inspection and don't seem to want them back afterwards.
However the revenue are still seem interested in out private financial records (although they agreed with our accountant to remove this from the inital meeting agenda). Two more questions;
Is it a formality that they will ask for private records as part of a local office full investigation?
Do revenue investigations always result in a full trawl through all priavte matters?

[jamesconstantine]

By law, if the Revenue are enquiring into a particular tax year, they
can ask for documents and information specifically relating only to
that year. Also, what they ask must actually be within the definition of
what constitutes “information and documents”. Where the Revenue has been
unreasonable in their request to you for information and documents with
regard to the above, you are well positioned to lodge an appeal.

James Constantine
Chartered Certified Accountant
http://www.taxadviceuk.com
Is your business tax-proof? Find out with our Unique Tax Savings Analysis.

[maths]

Almost certainly the two investigations are linked.

No it does not follow that one investigation will automatically follow from another.

Great care is needed before supplying private records. The IR are not always entitled to obtain them during an investigation; as so often is the case it all depends upon the facts and surrounding circumstances.

[deanshepherd]

I would be surprised if these investigations are linked.

Government departments are not reknowned for communicating with eachother, even if they do now operate under the same banner.


Dean
dean@mmi-online.co.uk
www.mmi-online.co.uk

[Reflect]

the Inland Revenue decided to look into my business for the tax year 2002-2003, I was then asked to supply personal bank statements for tax year 2002-2003, they still have not recieved these personal statements as my CA lost them, in the meantime they have asked various questions about expenditure, they are now asking for information on property sales back to 1996 which relate to properties purchased prior to 1993...can they do this? Also, I got the bank to send the statments my accountant lost, but they are now asking for all statements as in Visa's etc...Can anyone help me!

[titi]

I received a letter from tax inspector for tax return 2003-2004. He ask me to send my bank statement for the whole year. The first seven month in my statement has in and out around 70 thousand pounds. My country do not deal with international banks therefore it is not possible to send money from here or send from there.The only way is for my country people want to get buying from each other. I do as a broker but I charge very small amount. The person want to sell has to put the money in my account first and I withdraw and put that money into buyer account. Especailly I help my country student only. But I stopped it that business last year. Do you think that will be trouble for me eventhough I tell him the truth? Can you please help?