This was a VAT investigation by HMRC into a retail company. At the outset, the figures proposed by HMRC were significantly higher compared to the information provided by our clients in terms of their sales and profits. Our team of tax investigation specialist met with HMRC and explained the business and demonstrated how the sales estimates were incorrect. We provided the required information and after a long delay, HMRC accepted that there was no VAT or corporation tax due and the case was eventually closed. We are grateful to HMRC officers involved for their cooperation and keeping an open mind in relation to our client’s struggling business.

Our analysis: We have come across a number of situations, where only due to poor communication by the accountants/ tax advisers and tax payers, a simple tax investigation is made far complicated than it needs to be. We have seen some accountants and their clients panic when meeting with HMRC officers and mis-communicating important facts that could be seen positively by HMRC. In our experience, effective communication of the facts and background to HMRC officers is critical in any tax investigation.