Self Assessment Tax Return UK - 3 Steps to Avoid a HMRC Tax Investigation

In 2022 and 2023, I sincerely hope an HMRC Investigation is something none of my subscribers face. In today's video we're going into exactly how an HMRC investigation works, what prompts an HMRC enquiry and 3 simple steps that you can use to reduce your risk of facing an HMRC enquiry into your self assessment tax return UK.

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Watch the full Self-Assessment playlist:
   • How Do I Prepare For a Self Assessmen...  

⏱️ Time Stamps:
0:47 - What exactly is an HMRC enquiry?
2:46 - What prompts an HMRC enquiry?
4:57 - 3 simple steps to reducing your risk of an HMRC enquiry.

With the impending implementation of HMRC's "making tax digital" changes, HMRC have more and more ways to check self assessment tax return UK and find potential discrepancies or errors on each return.

The Taxes Management Act 1970 gives HMRC the right to enquire into personal and trustee tax returns. This right applies to the original tax return, and to any subsequent amendment to the return made by the taxpayer and it applies in all cases.

The vast majority of enquiries begin because HMRC suspect that there is something wrong with your self assessment tax return UK, as detected by their advanced computer system and network. In other words, there is either something on the face of the return that gives cause for concern, or HMRC have information from other sources that conflicts with what is shown on the return.

Nudge letters are often used by HMRC to prompt taxpayers to recheck an entry, or the lack of an entry, on a self-assessment return in a particular area. Nudge letters are not an enquiry in itself, but if you don’t deal with the requests or information on a nudge letter, the chances are HMRC will open a formal enquiry into your tax return.

HMRC have an enquiry window of 12 months from the date of the return to open an official enquiry into your self assessment if they believe something is wrong.

🔴 3 Steps to reduce your risk of an enquiry.

1. Get it done early. You have just over 9 months to submit your self assessment tax return, giving you time to re-check anything that looks out of the ordinary.

2. Use the supplementary fields available on the self assessment tax return to give HMRC more details on aspects on your return which may appear out of the ordinary such as capital gains and property.

3. Be honest. The thought of reducing your tax bill can be very tempting, especially with certain large companies perhaps not paying the taxes they should be. However, we strongly advise you are honest with your self-assessment, this will ensure that even if you're selected for a random enquiry, you have confidence in your numbers.

We hope this video gives you an insight into how HMRC investigations work and takes you one step closer to knowing your numbers. Be sure to check out our full self assessment playlist and get prepared for the 31st January. Thanks for tuning in, make sure to like and subscribe for more free quality advice from real qualified accountants.

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