A tax investigation is something which can be carried out by a country’s tax authority when their suspicion that an individual or company may be dodging tax payments. The tax authority in the UK is HMRC.
By law, HMRC is allowed to carry out a tax investigation on any individual or company on which they have reason to believe may be involved with tax evasion. The purpose is to investigate and discover whether any fraudulent activity has taken place. HMRC are able to conduct a tax investigation randomly as a kind of spot check, and they do not need to obtain permission from the suspected individual or company.
On the case of tax evaders
Accountants in tax investigation will either work on behalf of HMRC or for the suspected individual or company. HMRC accountants will request various documents and financial information. They have a quick eye for any missing information, anomalies, and are well informed and trained to spot any signs of tax evasion and fraud. No one will go ahead and barge into a suspect’s premises in a full-on raid for the documents (though HMRC have the right to take further legal action if someone or an organisation doesn’t comply); rather correspondence is usually via official letters and then meetings as necessary.
Accountants from accountancy firms and professional services firms will support their clients in tax investigation enquiries if they find out they are under investigation. They will provide advice, handle correspondence with HMRC on behalf of the client and negotiate any outstanding tax payments in order that the problem is resolved and any penalties are paid as quickly as possible with minimum impact on the client’s business and reputation.
Training to work in tax investigation
The majority of accountants in tax investigation are CTA/ACA/ACCA qualified. Some may come through the HMRC graduate scheme. School leaver schemes, apprenticeships and graduate schemes offer a way into the accountancy profession. Tax investigation can be developed as a specialism as you progress through your career.