Received The Dreaded Letter - Inland Revenue Audit

[Andy M]

Received the letter this morning, and so too did my accountant. I've never had an audit done before, but friends tell me to prepare for a hard ride, and one went out of business due to them messing him about so much.

As PH's search is currently down, does anybody have any advice as to how to minimise the 'pain'?

[Brown and Boris]

I had a VAT one last May. They send a list of things I should have available on the day. Is this a full jobbie or an 'aspect' enquiry?

The inspector spent the first few hours reconciling returns with the paperwork I had. Then they dip checked some of our invoices and tracked the paymnets through and the same with stuff I had paid. They checked a few recipts to make sure I had the receipt for the reclaim. They quickly latched on to a few problem figures and then checked them all the way through my books to get a figure I owed (I had been reclaiming VAT on postage and some parking, and a jar of coffee).

The advice I was given was don't engage in polite conversation, don't make it too comfy for them, don't be rude, only tell them what they ask.

I am sure others will be along shortly with much more profound advice.

[Eric Mc]

What are they investigating? -

you personally (i.e. Income Tax self assessment)?

a limited company?

is this a VAT visit?

a PAYE visit?

[pies]

No tea, and a small cold office

[Boosted LS1]

pies said:

No tea, and a small cold office

And a 2 legged stool, oh and no table.

[Eric Mc]

Depending on the nature of the investigation/enquiry - they may not have any right to come to see you at all. You can always go to see them instead.

[FUBAR]

Brown and Boris said:

The advice I was given was don't engage in polite conversation, don't make it too comfy for them, don't be rude, only tell them what they ask.

That just about sums it up.



Had a VAT inspection last year. The guy was done by lunchtime, but because he was booked for a full day he sat in the office we put him in, going over and over his findings

Its not always bad. Had an inspection years ago, a woman inspector, crikey she was a meanie...but left after 2 days muttering about sending us a cheque for £3,000

[Eric Mc]

Read my post.

I think this is a tax investigation, not a VAT one (although the OP has not clarified the exact type of "audit" (a term not usually used by the UK tax authorities) he is going to have.

In tax investigations, the Revenue has to conform to strict procedures and they have no automatic right to visit either your home or your business premises. Even if they suggest that they come out to see you at your premises, you can offer to see THEM at the tax office. They HAVE to agree - end of story.

[lanan]

When they come up with a figure for the duty owed, Don't offer a deal for cash..!!

[Andy M]

Thanks for the advice offered

The investigation is into me personally. My accountant is very honest, and very thorough, but my books are extremely complicated due to the ownership and part ownership of quite a few properties.

My office is heated by some industrial strength a/c units - totally unsuitable for their purpose, but I sense they may be perfect for 'the visit'. Cranked up, full power, should get rid of them quite quickly

My accountant has assured me not to worry, but I can't help but have squeaky bum syndrome right now.

Any other advice would be greatly appreciated!

[Andy M]

Eric Mc said:

...they have no automatic right to visit either your home or your business premises. Even if they suggest that they come out to see you at your premises, you can offer to see THEM at the tax office. They HAVE to agree - end of story.

How do we feel this would help? Surely them in their comfort zone isn't the best place to be? Though, do they like days out?

[Eric Mc]

It is always best to meet them on their premises - not yours. They use the visit to your premises to "view" your circumstances - cars on drive, pictures on walls, general house standard and hints at lifestyle. It helps them form a picture of you - which may or may not help your cause.

You should be able to answer all their queries sitting in front of them face to face. They do not need to see where you live or work.

[smartie]

in fact, you can refuse a face to face meeting completely and deal purely by letter.

[Egbert Nobacon]

Boosted LS1 said:

pies said:

No tea, and a small cold office

And a 2 legged stool, oh and no table.

And leave a dead fish in there for a week prior to their arrival

[Eric Mc]

Have you ascertained why the Revenue have decided to investigate your Self Assessment tax return? You are entitled to ask what particular area they are interested in.

[Andy M]

smartie said:

in fact, you can refuse a face to face meeting completely and deal purely by letter.

Hi Smartie

Would you recommend this?

[Andy M]

Eric Mc said:

Have you ascertained why the Revenue have decided to investigate your Self Assessment tax return? You are entitled to ask what particular area they are interested in.

I can only presume it's due to the large amount of traffic in and out of my accounts, though I don't know for certain.

I need to look at the letter again, but on first inspection they were requesting quite a bit of information from me.

[Eric Mc]

Get your accountant to do a bit of probing to find out the underlying reason for trhe enquiry.

You are entitled to ask this.

[2 5HAN]

lanan said:

When they come up with a figure for the duty owed, Don't offer a deal for cash..!!

Classic that and dont pay them with your off shore bank account cheque book hahahaha

[smartie]

Andy M said:

smartie said:

in fact, you can refuse a face to face meeting completely and deal purely by letter.

Hi Smartie

Would you recommend this?

It's not known for good things to come out of meetings IME. At least with written correspondence you have time to consider your reply and see what HMRC may be getting at. As Eric says, a slight slip of the tongue can cause serious problems!