- HMRC Inspections: My business is being targeted - what do I do?
HMRC Inspections: My business is being targeted – what do I do?
HMRC Inspections: My business is being targeted - what do I do?10 Jul 2019
HMRC has established several taskforces to focus in on various tax evasion hotspots, which are yielding big returns for the tax authority.
Why might my business be a target for a HMRC tax investigation?
For some businesses, handling mainly cash transactions has made it easier for them to commit fraud by under-declaring their income. Such businesses are likely to include pubs, takeaways, taxi companies, nail bars, hairdressers, beauty salons, or other smaller, independent outfits that largely trade services or where products are unlikely to be scanned electronically.
For example, many restaurants will still use a pad and a pen to take their customers’ orders. Understandably, a small business cannot always afford to install and maintain a point-of-sale (POS) system. However, its obligation to keep records of all orders and to return them for tax will be the same.
What is HMRC looking for?
HMRC has the power to start a tax investigation for any business it suspects of under-declaring its income for tax purposes. HMRC may have been watching your business for a period of time, or even undertaken a covert operation beforehand to pose as a customer.
What do I do if a HMRC officer arrives at my business premises?
When a HMRC officer arrives at your business, they will have with them an inspection notice. At this stage, we recommend that you ask them to wait for five minutes while you call your legal advisor.
Call us immediately on 0161 838 7867.
Go somewhere private but visible to the officer to make the call (such as outside the front of the premises). Do not make the call from an office or other location not visible to the officer – to do so could give the impression that something untoward is being carried out.
The officer will largely want to look at your daily taking sheets – for example, to see if your takings increase beyond what you would usually take on every other day the officers are not present.
The officer will have restrictions on what they can and cannot do. We can advise you on this during the call.
For example, they have no power to make you continue running your business during their inspection – and, in reality, this may depend on how disruptive the inspection will be to your usual operations, whether you have enough staff members on shift to deal with customers while you are attending to them, etc.
I am an accountant. What do I do if one of my clients receives a HMRC inspection?
If your client calls you to say that a HMRC officer has arrived at their premises for an inspection, call us immediately on the telephone number above.
What can I do to prevent my business being targeted by HMRC?
There are various things you can put in place within your business to reduce the risk that you will become a target for HMRC.
Provide your staff with training on the importance of recording all sales and incorporate this into their induction. Remember, however, that the responsibility will still fall to you as the owner.
Computerisation of the business, including POS technology and the ability to take electronic payments, will undoubtedly help maintain the integrity of your business accounts. This could also protect your business from employee theft and practicalities such as running an inventory.
Contact us if you are concerned about commercial fraud or being the subject of a tax investigation.