{"id":3584,"date":"2019-02-12T10:30:01","date_gmt":"2019-02-12T10:30:01","guid":{"rendered":"http:\/\/my-brains.co.uk\/jackross\/?p=3584"},"modified":"2019-02-05T10:44:35","modified_gmt":"2019-02-05T10:44:35","slug":"the-risks-of-a-tax-investigation","status":"publish","type":"post","link":"https:\/\/my-brains.co.uk\/jackross\/the-risks-of-a-tax-investigation\/","title":{"rendered":"The risks of a tax investigation"},"content":{"rendered":"

Will HMRC come knocking on your door?<\/strong><\/span><\/p>\n

It\u2019s a fact \u2013 humans are bad at assessing risk. We\u2019re terrified of things that rarely happen (plane crashes, power station meltdowns) but relatively blas\u00e9 about things that are statistically more likely to harm us, such as unwashed lettuce.<\/p>\n

The likelihood of HMRC swooping to investigate your business\u2019s tax affairs seems to be a particularly difficult risk to quantify.<\/p>\n

Why take the chance?<\/strong><\/span><\/h3>\n

In 2017, the Government published a report called \u2018Understanding evasion by small and mid-sized businesses\u2019. The authors interviewed 45 people known to have engaged in deliberate tax evasion in an attempt to get to the bottom of what made them risk it.<\/p>\n

It found that tax evaders cited a range of reasons for withholding tax.<\/p>\n

Some judged the risk of detection to be low, and assumed evasion would be hard to prove even when suspected, or thought that any fine they did incur would be outweighed by the financial benefits of bending the rules.<\/p>\n

Others were emboldened by a belief that, to paraphrase, \u201ceverybody does it, and nobody cares\u201d.<\/p>\n

Meanwhile, those who fancied themselves as having the gift of the gab simply assumed they would be able to talk their way out of prosecution.<\/p>\n

The report concludes that it is a problem for HMRC if people think the chances of being investigated, prosecuted and fined are low, and recommends raising the perceived threat level to deter would-be evaders.<\/p>\n

How likely is an investigation?<\/strong><\/span><\/h3>\n

There are no concrete figures on how likely it is that a business will be investigated, because the Revenue guards this information closely.<\/p>\n

For quite understandable reasons, it doesn\u2019t want people to know exactly how likely an investigation is, or what the triggers might be. The fact is, as with most law enforcement, its work depends on the fear of being caught as much as on actual prosecutions.<\/p>\n

There are some statistics that HMRC is willing to share, however, which give a sense of its activity:<\/p>\n