HMRC investigations into an individual’s tax return are generally carried out by local compliance offices and can cover any aspect of your tax affairs.
When HMRC first open an enquiry into your personal tax return they do so by sending you a letter which makes clear that the enquiry is being conducted under Section 9A of the Taxes Management Act of 1970. This is a clear indication that they do not suspect any serious wrongdoing but nevertheless there are concerns over the correctness of your tax return. If they did suspect that you were evading tax then the investigation would generally be conducted under their code of practice number 9 (see below) or code of practice number 8 where avoidance of tax is suspected, as distinct from evasion.
HMRC’s request for information in support of your tax return should not be ignored but careful consideration should be paid to the nature of information requested and in no circumstances should a meeting with HMRC be agreed without first seeking professional advice.
HMRC officers are guided by protocol as laid down by parliament and will generally keep to a set of rules and procedures to reach a conclusion of the enquiry which ensures that the correct amount of tax is paid. Nevertheless any investigation by HMRC can be both stressful and time consuming. The result of an investigation can often hinge on the interpretation of tax legislation and specialist knowledge and experience sometimes needs to be employed to counter HMRC’s views.