tax investigation

[vixen]

Hi! I was unfortunate enough to be investigated by inland rev. in 1995 for the tax year 92-93. I ended up owing them around £600, and paid this amount immediately. Does this mean that I run a higher risk of being investigated again in future,now that self assessment is upon us??
thanks
Paul

[Instinctive]

I don't think so. On the contrary, I think that someone who has been investigated in the recent past would not normally be expected to be investigated for a while.

However, you should note that the investigations are now focused based on a number of factors. If these cause the revenue any concerns, you will be picked up regardless of your previous history.

Some of the more basic facors in assessing enquiry cases are levels of turnover, gross profit margins, credibility of expenses claimed, credibility of your accountant, your available means to support your lifestyle, your visible wealth, accumulated savings, source of any capital introduced into your business etc.

Ramnik

[SK]

... and don't forget you might be one of those unfortunate people who are subject to a random investigation, although the Inspector will never inform you whether their investigation was random or becuause of the entries you made on your tax return.

Simon

[SK]

... and don't forget you might be one of those unfortunate people who are subject to a random investigation, although the Inspector will never inform you whether their investigation was random or becuause of the entries you made on your tax return.

Simon

[UKS]

Simon

"although the Inspector will never inform you whether their investigation was random or becuause of the entries you made on your tax return"

Not correct - I'm in the middle of this process and the tax inspector has made it quite clear that the investigation was launched on the basis of figures submitted.

[johnfkavanagh]

It is true that inspectors will sometimes give the reason for opening an enquiry but they are under no obligation to do so.

John Kavanagh
UK Tax Consulting Ltd
Chartered Tax Advisers
www.uktaxconsulting.co.uk
mail@uktaxconsulting.com
Tel: 020 7060 1660
Fax: 020 7060 1663

[SK]

I think that UKS may have limited dealing with Revenue Investigations, but is "Not correct" in his comment above and I would suggest that he reads the Inland Revenue's Enquiry Manual EM1070, where it states that

"Random selections should be worked as full enquiries. They should not be distinguished from other enquiries in dealings with the taxpayer or agent."

As it would be pointless for the Inspector to inform anyone that his investigation was purely taken from a random selection, as this would put him on the back foot to start off with.

Maybe UKS current investigation is purely on a random basis, but to protect the Inspector's integrity he has decided to advise him that the investigation is based on figures submitted, perhaps something to bear in mind!

Simon.