Much media attention on tax evasion and avoidance is focused on multinational corporations or the rich and famous, but HMRC are increasingly targeting non-compliance by more ordinary businesses and their owners which accounts for a significant proportion of the tax gap. HMRC’s wealthy and mid-sized business compliance directorate (WMSBC) is responsible for monitoring compliance of more than 100,000 businesses with turnover between £10 million and £200 million. The WMSBC has an established programme of ‘cross-tax enquiries’ for businesses that HMRC determine are at high risk of non-compliance. Businesses are selected for a review of their compliance with all tax regimes, and may include the financial affairs of the directors.
The way cross-tax enquiries are conducted by WMSBC can seem quite different from the way HMRC deal with large business enquiries. In one sense this is understandable because large businesses have a continuing dialogue with HMRC, so it should not be a surprise when, after an initial risk assessment, a particular issue becomes the subject of formal enquiry. By contrast, a WMSBC cross-tax enquiry will come as a surprise or, more likely in the eyes of the business, a nasty shock. Nevertheless whatever the ‘type’ of enquiry, it should be worked by adopting a collaborative approach in accordance with HMRC’s litigation and settlement strategy.
In a recent article for Taxation*, Kevin Elliott and Nathan Ross-Sercombe from KPMG in the UK’s tax investigations and dispute resolutions team take a look at the process behind cross-tax enquiries and the best way to handle them.
*First published in Taxation on 14 July 2016. Reproduced with permission.
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