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Monday 13th March 2023
What's it all about?
This article's designed to help you understand:
There are quite a few reasons why HMRC might decide to look a little closer at your tax returns, tax refund claims or other financial circumstances. When it happens, you’ll generally get a letter about it – and the crucial thing to remember is not to panic. An HMRC enquiry doesn’t necessarily mean you’ve done anything wrong or owe any extra money. In fact, it doesn’t even always mean HMRC has any specific concerns about you. The taxman often runs these kinds of enquiries at random just to make sure everything’s going smoothly.
For example, if you’re making a tax refund claim for your work travel or other essential business expenses, you might get a letter from HMRC to say they want to double-check a few things. While this is usually nothing to worry about, the process of an HMRC enquiry can take a while to work through. If your tax refund claim’s being looked into in an enquiry, it can take around 12 weeks to get your money paid out. That’s assuming HMRC doesn’t have a lot of extra questions to ask. If they do, obviously enough, the faster you get them the details they need, the sooner your claim will be approved and paid out.
Tax refund claims can involve juggling a fair amount of information, from counting the business mileage you’ve clocked up to shuffling receipts for equipment upkeep, accommodation bills and even your daily cuppa while you’re out and about for work. All those receipts and details mount up, but it’s absolutely essential to keep track of it all so you can prove the expenses you’re claiming back tax for. As long as you’re careful with your records, even if HMRC does launch an enquiry into your claim, you’ll always be on solid ground.
The kinds of HMRC enquiry you might find yourself facing will depend on your situation. If you’re self-employed in the building trade, for example, you might find the taxman looking into your Construction Industry Scheme (CIS) details. Self Assessment tax return paperwork is another area HMRC likes to check into once in a while, along with any unexplained differences between their records of your Pay As You Earn (PAYE) income and your own. If there’s a mistake on your side or theirs, the enquiry will set out to straighten things up. As long as you’ve taken good care with your records and have played fair with HMRC, there shouldn’t be any real problems.
Here are some of the more common types of HMRC enquiry:
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Staring down the barrel of an HMRC enquiry is no fun for anyone, and things can quickly go from bad to worse if you don’t answer the questions you’re asked – or if the taxman doesn’t like the answers. To keep yourself safe, you have to hand over any information HMRC needs and help to fix any problems they find in your finances.
So let’s take a look at what those problems could cost you. Sadly, a lot of people end up simply handing their entire refund amount back to the taxman. That’s a real risk for those who don’t have the time, expertise or confidence to fight their corner in an HMRC enquiry. If your enquiry’s particularly complicated or your records are a mess, you could find yourself spending weeks or even months sorting through it all. That might include hours sitting on HMRC phone queues or chasing up employers, clients and banks for the information you need.
If your enquiry turns up serious problems, then you might be looking at a range of painful penalties, including:
Even if the errors found are down to getting dodgy advice from fake experts or non-specialist accountants, it’s still your money and good name at risk when things go wrong. That’s why it’s so important to get the best professional advice you can from someone with real expertise in tax and refunds.
The goal of any HMRC enquiry is simple – all the taxman wants is to make sure you’re paying the right amount of tax. HMRC isn’t trying to cheat you, but it’ll expect you to be completely up-front and honest. That means you have to answer all questions truthfully and hand over any details that you’re asked for. Don’t stress out about this. This is all information that you should be keeping track of anyway, and HMRC will only ask for the things they need to confirm that your tax situation’s correct. If any of the questions sound weird and you don’t know why you’re being asked them, you can talk to HMRC directly and get an explanation.
Sometimes, the kind of language HMRC uses can sound a little scary. Try to remember that the taxman lives in a world of complex legislation and fiddly technicalities. HMRC needs to be precise in its wording, which can often feel intimidating or confusing. If you’re not sure what you’re being asked for or why it’s needed, you can even request a meeting to talk it through in person.
Finally, remember that you never need to go toe-to-toe with the taxman yourself. RIFT’s world-class tax expertise and RIFT Guarantee will always keep you and your money safe. Keep checking back here for more money tips and updates. We’re experts at saving you cash and we’re always here to help. That’s the reason why you’re better off with RIFT.
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