HELP! Under Investigation from HMRC

merlin68

you only have to keep records for seven years, so don't see they could go back for 20.

keaton

merlin68 wrote: »

you only have to keep records for seven years, so don't see they could go back for 20.

While this is true, if hmrc think that fraud is involved they can go back up to 20 years.

chrismac1

This is the pitfall of DIY tax returns, you are much more likely to get an enquiry which is not going to end happily. A few points:

1. Most CIS sub-contractors can claim mileage frome their "place of operations" to their sites. The place of operations can often be their homes.

2. HMRC are not entitled to view your personal bank accounts unless you are using them for business purposes.

3. As in previous reply, the mere lack of an invoice is not really a problem if there is other evidence that business expenditure was incurred.

Your accountants should know all of the above, plus other tricks of the trade to get you through with the minimum tax and penalty hit. Clearly use of own home is way OTT and may have been the trigger for the enquiry - by definition, you cannot BOTH be working many hours from home and doing lots of travel to customers it is one or the other.

meer53

merlin68 wrote: »

you only have to keep records for seven years, so don't see they could go back for 20.

http://www.hmrc.gov.uk/manuals/salfmanual/SALF411.htm

densol_2

The £4 pw for home use is for employed people not self employed. Ok you are not massively using your home but I bet its far more than £4 pw. The accountants will help. Let us know how you get on - it will be good for the forum experience as well

PlutoinCapricorn

Have you got any colleagues whose figures you could look at? If they are all buying tools regularly, for similar amounts to yours for example, this would make your amounts more acceptable. How much do they claim for the work they do at home?

densol_2

chrismac1 wrote: »

This is the pitfall of DIY tax returns, you are much more likely to get an enquiry which is not going to end happily. A few points:

1. Most CIS sub-contractors can claim mileage frome their "place of operations" to their sites. The place of operations can often be their homes.

2. HMRC are not entitled to view your personal bank accounts unless you are using them for business purposes.

3. As in previous reply, the mere lack of an invoice is not really a problem if there is other evidence that business expenditure was incurred.

Your accountants should know all of the above, plus other tricks of the trade to get you through with the minimum tax and penalty hit. Clearly use of own home is way OTT and may have been the trigger for the enquiry - by definition, you cannot BOTH be working many hours from home and doing lots of travel to customers it is one or the other.

Just a thought Chris - if its the ' short form ' expenses are lumped together at box 20 - so not necessarily a flag ? Op did u complete short form pages or full pages ?

Chris_Peters70

PlutoinCapricorn wrote: »

Have you looked at/considered joining the TaxationWeb forum? I found this:

"HMRC often tell people that they cannot have tax relief for expenses for which the invoices have not been retained. There is no rule in tax that says this, and Inspectors of Taxes are forced to admit this fact when challenged. I mention this as one reason why you need advice from a specialist who is used to dealing with investigations - i.e. to make sure that HMRC don't take advantage of the fact that you don't know the rules."

I did but the there didn't seem to be much traffic there within the forum.

Chris_Peters70

meer53 wrote: »

My ex was self employed in the construction business too and HMRC called us in for an "investigation" We also had a visit from the VAT inspector too, that was more scary than the HMRC visit. We ended up with a tax refund of £14k although my ex's turnover was into 6 figures.

Be honest with them, take everything you can find, we took our accountant with us too, having someone with you who knows the way HMRC work is helpful. Do you have anyone you can take with you ? Trying to bluff your way out of it won't work, i hope it goes well for you.

Thanks meer,

I'll have to be honest, I have no choice anyway. I will probably employ the use of an accountant with a view to minimising my liabilities.

PlutoinCapricorn

There does indeed appear to be a shortage of people who spill the beans about their experiences of investigations - I wonder why?