If you are wondering about what tax compliance check is and what the reasons for compliance checks are, here is a simple breakdown for you.

A tax compliance check is an investigation which can be anything from a few minutes phone call to a visit. The reason for this check is to confirm whether you are paying the right amount of tax and are not involved in any fraudulent activities.

Even though a tiny percentage of checks are done on a random basis, the vast majority arise from an analysis of the risk of your inaccurate tax. Normally, tax investigations fall into two types; full tax compliance check and an aspect tax compliance check.

In a full compliance check, HMRC inspects all the business records for a whole year and other entries on the tax return. However, HMRC will only check one or two aspects of the individual’s tax return.

A tax enquiry must start within 12 months of the due date for the tax return. The enquiry deadline may be extended up to one year from the end of the calendar quarter if the tax return is filed late. In case if errors are found during such enquiry, HMRC will often assume that similar errors may have taken place before and will ask to look after your previous years too. This will only lead to more check-ups and penalties if errors are found in the previous years.

As HMRC are entitled to look at the records supporting the tax returns, they can also often request you some information which they are not legally entitled to.

After such investigation, HMRC will write to tell you about the results which will help you know whether you have overpaid or underpaid tax. If you are found to have paid too much tax, you will be repaid and may also get interest on the owed amount.

Such investigations can be complex and stressful. Thus, if you want professional advice to deal with this matter, get in touch with our tax advisors now at 020 7060 9556 or info@harleystreetaccountants.co.uk.