It does not matter whether the tax investigation is into tax avoidance or tax evasion, the taxpayer needs help and guidance throughout the process.

What is tax avoidance?

Tax avoidance is legal and is where a taxpayer uses a scheme or arrangement that is preordained and results in a lower amount of tax being paid. Tax avoidance is considered in more detail here.

What is tax evasion?

Tax evasion is illegal and is where a UK taxpayer deliberately sets out to underpay tax and cannot be committed inadvertently or by mistake. Tax evasion is considered in more detail here.

Who should be in overall control of a tax investigation?

The adviser.

Who should challenge HMRC in what they are seeking?

The adviser.

Who should control the direction and pace of any tax investigation?

The adviser.

Why?

Tax investigations can be complex and experience will always tell.  The legislation is there for both HMRC and the taxpayer to adhere to.  It will rarely be the case that the taxpayer knows more than HMRC. The taxpayer therefore needs an experienced adviser on their side who knows what may happen next as well as answering the here and now.

Penalties

An experienced adviser will save the taxpayer money wherever penalties are involved.  The amount of tax due is often just a mathematical calculation as is any interest that may be due. However, penalties are variable and are now based on a taxpayer’s behaviour.  The adviser should advise and to some extent dictate how the taxpayer is to behave and thereby secure the lowest penalty in any Settlement.