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Wednesday 20 January 2010

Dains are warning that there has been an increase in the number of investigations into companies’ tax affairs by HM Revenue and Customs (HMRC) since the authority was granted new powers earlier this year.

Andy McQuillan, Tax Partner at Dains said “Since 1 April 2009, HMRC has had more scope to request and examine company records, in order to ensure the correct levels of corporate tax, VAT or PAYE were being paid.

Many companies take out insurance against the cost of such investigations, and insurance companies have reported a rise in claims over recent months, following a slump in requests before the new rules came into force”.

There have also been reports of an increase in the number of companies being investigated over all three taxes at once, which is likely to mean a reduction in the overall number of enquiries, but also make the process of dealing with one more onerous for any company which is selected.

HMRC’s ‘presumption of continuity’ powers also mean that, if an error is spotted, they may assume a similar error has been made in previous years and adjust the tax bill accordingly. If a firm believes this is not the case, they will have to go through the time and expense of challenging HMRC’s stance.

HMRC has insisted that its new powers allow it to work more efficiently and reduce costs for compliant taxpayers.

For more information or advice please contact Andy McQuillan on tel: 0845 555 8844 or email tax@dains.com

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