{"id":1563,"date":"2018-11-23T16:33:19","date_gmt":"2018-11-23T16:33:19","guid":{"rendered":"https:\/\/www.wizzaccounting.co.uk\/blog\/?p=1563"},"modified":"2021-10-08T13:08:37","modified_gmt":"2021-10-08T13:08:37","slug":"preparing-for-hmrc-investigations","status":"publish","type":"post","link":"https:\/\/www.wizzaccounting.co.uk\/blog\/preparing-for-hmrc-investigations\/","title":{"rendered":"Preparing for HMRC investigations"},"content":{"rendered":"

\"Guide<\/p>\n

An HMRC investigation is a painful, expensive, unpleasant and time-consuming experience. There are different reasons why your business might be selected for an investigation<\/a> and whatever the reason the whole experience can take up to 16 months on average and cost upwards of \u00a35000.<\/p>\n

Fortunately, the HMRC investigation doesn\u2019t just choose businesses at random to investigate, they do conduct audits occasionally at random, but even with that, the business names are generated at random.\u00a0<\/strong><\/p>\n

Reasons for HMRC Investigation;<\/h2>\n

That being said, we\u2019re going to go through some of the other reasons why your business might be investigated by the HMRC:<\/p>\n

Accounting representation<\/h3>\n

Business owners that feel they can do it all by themselves run a risk of being chosen for an audit or investigation. Although this is not a rule set in stone it is one of the most common denominators for businesses investigated by the HMRC. The logic behind this is that if a business owner is filling his taxes without a third party\u00a0VAT consultant input it might be for a couple of reasons. The first is, they might not want a third party to see finances, which suggests fraud, the second reason is the chances of making mistakes are greater when the account is not done by a professional.<\/p>\n

Inconsistent figures<\/h3>\n

The HMRC investigation normally has a good idea of the average earnings in most industries. So when if you submit your taxes with inaccuracies and the numbers don\u2019t match up with industry standards, then you\u2019re probably opening yourself up to an investigation.<\/p>\n

Specific industries<\/h3>\n

For those working at barbers, or taxis, or fast food restaurants and other small to medium-sized business that deals with a lot of cash payment, they might be subjected to more than the average amount of investigations and audits. In these situations, HMRC<\/a> investigators are forced into action because of higher instances of risks for tax invasion and bribery.<\/p>\n

Preparing for an HMRC investigation<\/h2>\n

Vat reclamation<\/h3>\n

According to Accountancy Age<\/a>, the first thing to do is to make sure that you are claiming correctly. Some businesses have taken to avoiding the whole process all together, although this means you\u2019re reducing the risks of being investigated, you\u2019re also walking away from money.<\/p>\n

Audits<\/h3>\n

Based on historical finding, we\u2019ve noticed that for SMEs tend to have audits at least once every six years. It may take an average of three months for most companies to prepare for an HMRC investigation audit, some of the things you would need to prepare include information of auditable account, corresponding receipts, expenses claims and proof of approvals and legitimate expense claims.<\/p>\n

Payment process<\/h3>\n

The investigators will also need to see your payment process. You must show them that the process you have in place cannot be tampered with. You\u2019ll need to identify the people with access to the export and output so calculate how many touch points you have.<\/p>\n

Approval process<\/h3>\n

Most businesses will have an approval process in place, but that is not to say it is the correct approval process. You need to think about who needs to review expenditures and make sure that the process is visible and transparent.<\/p>\n","protected":false},"excerpt":{"rendered":"

An HMRC investigation is a painful, expensive, unpleasant and time-consuming experience. There are different reasons why your business might be selected for an investigation and whatever the reason the whole experience can take up to 16 months on average and cost upwards of \u00a35000. Fortunately,…<\/p>\n","protected":false},"author":1,"featured_media":1568,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[27],"tags":[],"yoast_head":"\nPreparing for HMRC investigation | Wizz Accounting<\/title>\n<meta name=\"description\" content=\"An HMRC investigation is a painful, expensive, unpleasant and time-consuming experience. 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