UK tax investigations and tax enquiries
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HMRC can investigate anyone either to believe that some aspect of tax return or business accounts is wrong. And also HMRC can randomly select a proportion of the tax return every year. In the first two years of self-assessment, some 15,000 returns were investigated.

The Revenue will write to you to let you know that your affairs are being investigated although it will not normally give the reason behind its decision to launch an enquiry.

Under the self-assessment regime, the Revenue must start any enquiry within 12 months of the last filing date of 31 January but there is no requirement for an investigation to conclude within a fixed period of time. Some enquiries can last more than two years.

The taxman wouldn’t give a reason why they have chosen their enquiry but they write to let you know the area they want to investigate.

If taxman discover the problem or any tax underpaid, the taxpayer will have to pay what is due plus any penalty or interest accrued.

If it’s a serious matter or fraud, then special compliance team deal this case. Serious fraud (amounts of more than £50,000) is concerned, the Revenue can start to request information from banks, accountants and other parties if it is the tax inspector's "reasonable opinion" that this will help the investigation.

Prosecutions and the penalties can be severe including jail sentences and stiff fines designed to recoup the unpaid tax and penalties.

There are 10 tips to remember to deal with tax investigation

1: Keep Calm
2: Get expert advice at the outset
3: Don’t discuss your tax affairs with anyone but a tight circle of tax advisers
4: Don’t lie to HMRC
5: Don’s Assume HMRC is ignorant of anything
6: Don’t try to destroy evidence
7: Never make a partial disclosure
8: Once you have reached a settlement, don’t offend again
9: Be well prepared for any meeting
10: Make significant payment on account (but relevant)