Warning for businesses ‘putting off’ HMRC enquiries

HMRC has announced it is suspending enquiries into taxpayers and businesses that are under investigation as a result of the coronavirus pandemic, but they should not be lulled into a false sense of security, a tax and advisory firm has warned.

Blick Rothenberg suggested that putting off HMRC’s queries until the ongoing Covid-19 situation is over might “not be as good an idea as it sounds.”

HMRC has already confirmed it is writing to taxpayers under enquiry, acknowledging that during the current lockdown it will not be requesting information or documents, or pressing for responses to requests already made, and in some cases HMRC is also suspending enquiries.
 
“Whilst this may seem to be welcome news, there may be good reasons to press ahead if taxpayers or their businesses are already under enquiry,” tax dispute resolution partner at the firm, Fiona Fernie, commented.

“Putting off HMRC’s queries until after this difficult period is over may not be as good an idea as it sounds. Many will need to be concentrating hard on reviving their business and HMRC’s questions will inevitably distract attention from that at a time when loss of focus on business management could be potentially devastating. 

“For individual taxpayers and businesses whose activities are currently curtailed, it would be sensible for them to use the time they have now to deal with HMRC rather than store up problems for the future, although clearly employees who are furloughed cannot be involved in responding to HMRC enquiries on behalf of their employers. After all, if tax is due – it is still going to be due when we come out of this.”

Blick Rothenberg also warned that the current period is a good opportunity for businesses to make sure their “house is in order” – particularly for those who are taking advantage of the Job Retention Scheme (JRS).  

The firm also noted that head of HMRC, Jim Harra, has already publicly admitted the Government’s Coronavirus Job Retention Scheme – as well as the parallel scheme for the self-employed – each have significant “fraud risks” associated with them.

Director, Robert Salter, added: “It is vital for legitimate businesses to ensure that they correctly document and evidence any claims that they make for JRS grants in respect of their furloughed employees, if they wish to avoid any future audit challenges from HMRC in respect of these claims.

“This is particularly important in this situation, as one of HMRC’s main weapons against JRS fraud will realistically be tax enquiries and reviews, once the initial coronavirus ‘chaos’ and confusion has subsided.”

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