As the owner of a small business, you need to be aware of your rights before HMRC comes knocking at your door to undertake a tax investigation. Knowing what to expect determines how you behave during the audit process, and being co-operative during an HMRC tax investigation will put you and your company in a positive light.

Timing of Visits

HMRC usually gives you seven days’ notice if they wish to inspect your premises in order to get an overall view of your business. They will tell you exactly what documents they want to see and approximately how long the investigation will take.

HMRC can also send officers to visit your premises unannounced. This isn’t likely to happen unless you’ve consistently refused to grant them access in the past, or if they’ve received a tip-off and believe contacting you in advance would give you time to cover your tracks.

Allowing HMRC Tax Investigation Officers Access

When HMRC turns up for a pre-arranged visit, you are legally required to let them in. It is within your rights to check the identity of the officers. To do so, call the number you were given in your correspondence arranging the visit.

If the visit is unannounced, you have the legal right to turn the officers away. Before doing so, however, ask the officers for their credentials and who sent them. If their unannounced visit was approved by the First-Tier Tribunal (FTT), the appeal tribunal that deals with tax discrepancies, refusing entry could land you with a £300 fine.

Investigating Your Premises

HMRC’s officers have the right to inspect all business assets, documents, stock, and capital equipment on the premises of your business. During this process, you (or a member of your staff) should accompany the officer. It’s important to note that the right to inspect your business premises is not the same as a police-issued search warrant. The officer may only look at what’s on display, they cannot go searching through drawers or filing cabinets.

If you’re a small business owner running your company from home, the investigating officer has the right to investigate any part of your home that’s used for your business (such as a spare room you use as an office), but they have no right to see any other part of your home. Consider closing the doors leading into other rooms of your house before their arrival.

Contact an Experienced Accountant

Receiving notice of an HMRC tax investigation can be a daunting prospect for SME owners, especially if it’s the first time you’ve encountered one. Speaking with our professional tax accountants to discuss the implications of your upcoming tax investigation can help put your mind at ease. We provide tax advice for clients throughout London and in local areas including Putney, Wimbledon, Fulham, Hammersmith and from our Central London office in Cavendish Square.

Contact us today on 020 8108 0090 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

Aspects of this article were first published on 25/01/16 and updated on 31/01/18