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Full Enquiry for no apparent reason

We have just received a letter from HMRC regarding a full enquiry on a ltd client which has baffled us slightly.

We can see no justification whatsoever for this, nothing at all looks odd in the accounts, no overdrawn directors loans, no strange related parties or anything. Client keeps great set of books on Sage.

Is this something other accountants are finding? Is this a trend within HMRC to just start a full enquiry rather than asking aspect questions??


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By halesir
20th Apr 2012 13:32

Random Enquiry?

HMRC no longer needs to justify an enquiry. It may well be that this is a random enquiry selected by the computer to "police" the system. HMRC will probably not tell you whether it is random or not but ask them to outline their specifc areas of concern and the response may give you a clue.

No need to worry though, your Fee Protection Insurance will cover the fees. You did offer your clients FPI, didn't you?

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20th Apr 2012 17:37

Yes, all clients offered FPI !!

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20th Apr 2012 15:31

Is there such a thing now?

I thought HMRC had abandoned random enquiries in favour of targeted enquiries. Or is senility catching up again?

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01st May 2012 23:39

Re: Is there such a thing now?
They still do some random enquiries as a way of determining whether or not their targeting process works effectively.

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20th Apr 2012 15:46

Maybe . . .

 . . . HMRC know something you don't?

Have a talk to your client about this before responding to HMRC.  Remind the client that HMRC get information from banks etc (in the UK and overseas) as well as tip-offs from disgruntled ex-employees, neighbours, etc.


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By ldcldc
30th Apr 2012 11:52

Random enquiry

Some clients have FPI, some dont want to pay the premium.  Thats their choice.  But, when there's a completely flippant enquiry that takes up time and costs fees, why shouldn't HMRC have to bear the costs.  The loser in any other type of litigation has to pay. Might make HMRC officers behave more responsibly.

It really bugs me. 

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By bj2404
30th Apr 2012 12:48

Also FPI not tax deductable

Which again seems unfait for a totally flippant enquiry!

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By kssco
30th Apr 2012 12:49

Randon enquiry?

I had a similar enquiry a few years ago on my best-run client company.  Two Revenue officers spent a day and a half at my client's office, thanked us for our cooperation and said that there were no adjustments necessary.  My guess is that their risk profiler had picked up fairly high (and genuine) costs for specialist subcontractors and travel & subsistence expense, including overseas.  Perhaps your client has something similar in their accounts. 

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30th Apr 2012 13:11

Old Wives' Tales

I was once told that the Revenue did have a certain percentage of random enquiries that were determined in advance of even the issuing of the Return.  It makes sense because we all know how you could dress up the figures within accounts so that they looked fine on the surface.  If you don't have a system for checking stuff even if it looks fine, then there's no integrity to the system.

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30th Apr 2012 16:50

ask for their risk assessment

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By hadend
30th Apr 2012 17:41

Yes, I have a similar case

I have a similar enquiry into a partnership, though mine is an aspect enquiry. Again, cannot think of any justification, which makes me kind of nervous, in case I am missing something ore there is a hidden agenda.

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30th Apr 2012 21:49

Random enquiries by HMRC

My understanding is that HMRC conduct a few thousand random enquiries into self-assessment tax returns each year (which is a very small proportion of the total number of returns they receive) and that a random enquiry will always be a full enquiry rather than an aspect enquiry.

If you are dealing with an aspect enquiry does that not indicate that HMRC have a concern about the aspect about which they are enquiring?


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01st May 2012 08:06

Just get on with it ....

if there is nothing to hide then it will be quick won't it? Frankly I am glad that my taxes are protected by random and targeted enquiries. As the accountant it is a pain but on average I get  one every 3 years so hardly a huge concern.

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01st May 2012 12:00

What Type Is It?

You need to determine under what regime the Enquiry is. If under the 'trial' or the Single Compliance Process (SCP), then HMRC should disclose the reasons for the Enquiry.

Many Areas that have completed the SCP trial have adopted an open approach to disclosure, even where they are not currently compelled to do so.

The SCP trial appears to have worked well and those that have been involved and it seems they are confident that the process will, in the main, be adopted for future working.

So, my clear advice is to ask for reasons, you might just get an answer, if only in a spirit of cooperation.

If its random, then your client is one of a very small number that HMRC select each year. Previously, I have known an Area to only have one or two randoms that they pursue.

By far the main reasons for HMRC to open an Enquiry remains either results scoring from the entries on an SA100 or third party information. Has you client fallen out with a customer, spouse or neighbour who want to cause problems?????


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01st May 2012 12:39

Knowing HMRC

They have probably picked this one because it is clean nice easy days work then home for tea ?

They would have far too much work to do if they chose all the obvious ones !!

I would never assume it is a random enquiry though.

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