Ten top tips for surviving a tax investigation. By Rebecca Benneyworth

There is nothing pleasant about being the subject of a tax investigation by HM Revenue and Customs. Here, tax lecturer of the year, Rebecca Benneyworth offers her ten top tops for investigation survival - for taxpayers.

"If you want to handle your own affairs in a tax enquiry, you will need to be thorough. This will take up a great deal of your time, but here is how to prepare properly."

1. Get organised
When getting your records together for submission to the tax office, sort them into logical order, and file them neatly. Make sure that all expenses have a receipt, and that these are cross referenced to the prime records. Provide supporting evidence whenever possible. Get copies of missing records such as bank statements.

2. Think critically
The inspector wants to be sure that you have correctly declared all of your income. Is there something that looks obviously 'wrong' which needs an explanation? Did you have a bad year for specific reasons? Try to establish supporting evidence of why your income reduced. Is there something else which an outsider wouldn't understand?

3. Review your expenditure
It is too late now to change what you have claimed for, but it is better to be prepared. If you are unfamiliar with the rules, now is the time to read up. Use the self assessment guides prepared by HMRC to decide what you should have claimed for. These are available on the internet at www.hmrc.gov.uk. Remember that where something was spent partly for private and partly for business, strictly it is not a business expense because of the 'wholly and exclusively rule'. If you feel able, look up HMRC internal guidance on difficult areas to see what you are likely to be asked. The manuals are on the internet.

4. Be honest
Have you omitted to declare some income, such as rent? If you have, now is the time to speak up. If you have omitted a source of income from your tax return, things are getting more serious, and you may need help to sort it out. As a minimum, you should now get together details of all the income which has been omitted and any related expenses, with as much evidence as possible. Doing this will affect the level of penalties you incur later.

5. Meet the deadline
If at all possible, meet the deadline for submitting your records. You will need to start work straight away to complete all of the preparatory work, but this will ensure that you are properly prepared for any questions you are asked. If there are missing records or receipts, you may need to submit most of the information and provide a list of items to follow, while you obtain copies. If things are really in a state, you may need to ask for more time, but it is better to do this early, rather than waiting until the records are already late.

6. Ask for an agenda before a meeting
Again, you will need to be properly prepared to attend a meeting, so ask for an agenda and prepare for any questions you are likely to be asked. Put yourself in the officer's shoes and think about what the agenda items mean.

7. Don't cancel at the last minute
If you get a fit of nerves as the meeting approaches, don't 'duck out' at the last minute. It may help to meet at your office, if you have somewhere quiet where you will not be interrupted. Don't meet in a room which is full of junk, or allow constant interruptions. You will need to concentrate and give this your full attention.

8. Make notes of what is said
Don't try to remember everything that is said; write notes so that you can check what you were asked and what you agreed to. Following the meeting, ask the officer to provide a copy of his notes of the meeting for you to review. Check them carefully to ensure that nothing you said was misunderstood. Use your notes as an aide memoir. If you want to tape the meeting, you will need to check with the officer that he agrees. You may need to get any recording transcribed to use as evidence.

9. Be realistic
If there are contentious items, consider agreeing to a settlement rather than fighting every point to the bitter end. If you are absolutely certain about your point, then stick to your guns, but there may be a number of 'grey' areas. Bear in mind at this point the opportunity for the inspector to look at earlier years. The amount you agree to now may be treated as applying to the last few years. If there is a specific issue making it relevant only to the current period, you will need to establish this early.

10. Don't forget penalties and interest
In future, penalties will be determined by your behaviour. Did you take reasonable care over your tax affairs? Are your records well kept? If you were careful and made a simple mistake you will not be penalised. If you have been careless, the tax you settle can be increased by up to 30% as a penalty. If you deliberately omit income from your return the penalty could be as high as 100% of the tax. Late paid tax always attracts interest, and this can add a sizeable sum if earlier years are opened up.

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More top tips
This week is all about tax investigations: Related links include: ten Investigations: The taxpayer's story a look at what catches out the unrepresented taxpayer, whilst Simon Sweetman has compiled his top ten tips for tax agents.