HMRC restarts enquiries

HMRC is restarting its enquiries into taxpayers’ affairs as a “matter of urgency”, according to tax and advisory firm Blick Rothenberg.

HMRC had paused its investigations amid the current coronavirus pandemic but has now begun its operations, and according to the accountancy firm, its remit will now also include whether employees broke the rules and worked while placed on furlough.

Fiona Fernie, a tax dispute resolution partner at the firm, said that tax inspectors returning to work will likely be looking at both personal and business tax affairs with “renewed vigour”.

She also said that alongside whether or not those who were not supposed to be working during furlough were, HMRC would also be investigating things like internet trading while the lockdown has been in place.

She said: “HMRC provided taxpayers with a brief respite from investigations given the potential problems with accessing information caused by the lockdown, but that now appears to be over.

“The assistance the Government has provided to businesses and individual taxpayers in recent months have been costly and they will want to ensure that borrowing requirements are not exacerbated by taxpayers who are not paying the correct amount of tax. There is no doubt that HMRC will be under pressure from the Government to look at anyone who they think is defrauding the system as a matter of urgency.”

She added: “In addition to the resumption of straightforward aspect enquiries and compliance reviews, we understand that HMRC have been given the go-ahead to start new Code of Practice 8 (COP8) investigations – i.e. those that involve significant amounts of tax or complex technical arguments.

“By contrast, however, new Code of Practice 9 (COP9) investigations will not start yet. COP9 enquiries commenced before the pandemic struck were never paused in the same way that other enquiries were, although HMRC has been very reasonable about providing additional time to submit reports in view of the difficulties posed by the lockdown. Taxpayers previously under enquiry and who took advantage of HMRC’s offer to pause, should now prepare to resume their dialogue.”

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