For many, the threat, or even the idea of an investigation of their tax affairs by HMRC is terrifying. Our tax system largely relies on self-assessment, for which read ‘they only know what you tell them’. And so random or targeted checks into one aspect or another are, they would argue, essential to keep us on our toes and ensure ‘compliance’.
It’s worth their while, as the average investigation nets around £35 for every £1 spent. Pretty good value for money, and the biggest haul by far is from big companies with big tax bills. The next, however, is not where there is suspected fraud or avoidance, but from checks on ‘individuals and small business compliance’. Which could mean any one of us.
In our experience, one aspect or another of IHT returns are checked if the estate is large or if trusts of one kind or another are involved. But as more who have never before had to complete a tax return are drawn into the tax, with inflated pensions and growing investments, expect their roving eyes to move still lower down the tax-food chain.
