Self-assessment season is upon us, and if you are required to do so, you have until the 31st of January to complete and submit your tax return here in the UK for the previous tax year. One of the aspects of the self-assessment system that you should be aware of and maybe have faced in the past or HMRC inquiries and investigations into your tax returns. Now we will tell you what is HMRC tax inquiry normally props an inquiry And three steps you should take to reduce the risk of an inquiry before I get into today’s video. Be sure to hit that subscribe button as well as a notification Bell to make sure you’re kept up to date with all of our latest content. This really helps us to produce more helpful videos and to get your free quality advice from real qualified courses. So unless you hear otherwise from HMRC, you will pay any outstanding liability based on the figure shown in your self-assessment tax return, and this is what is known as a process now check later. ER system to encourage compliance and honesty HMRC’s extensive inquiry powers are an essential element of the self-assessment tax system for them the taxes management Act of 1970 gives HMRC the right to inquire into personal and trustee tax returns this right applies to the original tax return and to any subsequent amendments to the return made by the taxpayer and it applies in all cases. The term inquiry does not have a statutory definition and therefore carries its normal dictionary.
Inquiry manual paragraph 091 HMRC put forward the definition as seeking information on asking and questioning consequently anything beyond a correction of an obvious error or Omission is treated as an inquiry and must be dealt with by way of a formal notice of inquiry which you would receive in the post. Before we continue with today’s video. We’re thrilled to be launching the accounting and tax Academy membership site early next year. We’ll be posting downloadable resources, touch tutorials, and in-depth courses that you can’t access anywhere else, and the best part is it’s absolutely free to join head to the link in the description box below and register your interest today.
Inquiries begin because HMRC suspects that there is something wrong with your self-assessment tax return as detected by their Advanced computer system our Network. In other words. There is either something on the face of the return that gives cause for concern or HMRC has information from other sources that conforms with what is shown on the return Notch letters are often used by HMRC to prompt taxpayers to re-check an entry or the lack of an entry on a self-assessment return in a particular area.
Inquiry in itself, but if you don’t deal with the request for information on an agitator, the chances are HMRC would open a formal inquiry into your tax return there is what’s known as an inquiry window, which is basically a time limit HMRC have to open a formal inquiry. Let’s suppose you complete your 2019-20 self-assessment tax return and somebody on the 31st of January 2021 the deadline date assuming HMRC received the return on the same day than under the taxis management Act. In 1970 they will have up to 12 months from this state to open inquiry. There are circumstances where HMRC can open what is called a discovery assessment Beyond these 12 Uncle fiery window, but we’ll cover that in a later video. Be sure to click on the Bell notification icon to get notified when we release this. There are generally three types of inquiries HMRC can open, namely an aspect inquiry, a random inquiry, and a full inquiry, and an aspect inquiry that relates to one or select a specific.
Entries in your words as long as it’s handle world and honestly and expecting bar is up in Swift and to the point random inquiries still happen HMRC will select a number random returns not based on any risk factors that are primarily designed to ensure that the inquiry system is working well and to send out a little bit of a message that they do actually check people self-assessment returns a full inquiry goes a bit deeper and it is where HMRC seek to inquire into every aspect of your self-assessment return and to also test your own. Overall financial affairs ordinarily HMRC inquiry should be nothing. Worried about so long as you follow the steps in the next section.
There are a number of steps and chat you can make to significantly reduce the event of any type of HMRC inquiry. But these are the three we recommend you focus on number one is to get your self-assessment tax return drafted as early as possible so you all your accounts and gets time to actually review the return objectively. Don’t forget from the 6th of April to the 31st of January. You have almost nine months to prepare, complete and submit your return. So there is plenty of time if something looks odd. Take a step back, and it gives you a chance to iron out any accidental and non-believer errors or omissions before submission as so you are exercising reasonable care honest mistakes do happen in HMRC do understand this, but you want to reduce the chances of inquiry in the first place. So, therefore, take a little extra time, and the scare number two is to use supplementary notes where appropriate in your self-assessment tax return H. Bar C provide blank boxes to add supplementary notes optionally you can add text to provide additional useful information and explanations that can provide HMRC with some clarity and reduce any misinterpretation or misjudgment of your numbers that they computers could throw up. This is particularly useful. If you are fears are somewhat more complex, for example, you have capital gains properties overseas income, or other types of complexities, and last but not least, be honest and don’t deliberately Miss State fabricate or conceal material numbers. Just the same bit of tax.
Yes, there is a moral argument as to why individuals and large organizations perhaps don’t pay their fair share of taxes, but for most of us, Audrey’s focus is something we cannot directly control. So therefore it’s wise not to let this skew your judgment and the legal obligation with your own tax Affairs if HMRC do launch an inquiry and dig deeper their tax investigators are trained to unearth such intent through their questioning and this could lead to a full of inquiry your time and energy is in diverted away from your job. This is and family and quite frankly. You could be facing a heap of issues, not to mention potential heavy penalties interest on underpaid tax, and in the absolute worst-case scenario, a criminal investigation and proceedings against you, you’d rather sleep well at night with a clear conscience. So you have the right mental energy and effort to do what you do the best, and on a final note, the law does and our taxpayers organize their financial affairs in such a way as to minimize their liability to tax. This is what’s known as tax avoidance, which
From within the script that’s of the law is completely legal tax evasion. However is strictly illegal, and HMRC has great powers to ensure that people acting outside them or face the consequences for their actions.