Tax Investigations in the Hospitality Sector

Subscribe

There’s little doubt that an urgency to replace depleted funds as a result of COVID-19 expenditure will increase pressure on the government to recoup any underpaid tax.  

The hospitality industry is a lucrative target for HMRC because of the scope for businesses to make mistakes not just with their tax, but also with their VAT and PAYE liabilities too.  

The government’s Furlough scheme has been a saving grace for many hospitality businesses, but there is no doubt that there will have been a mixture of misuse and mistakes since its introduction in Spring 2020.  

HMRC has now set up a dedicated furlough fraud hotline where people can report businesses that are not properly complying with the rules of the scheme and are defrauding the public purse. 

Some of the cases that will be evaluated by HMRC will not be investigated by a specialist fraud team, but might simply be the trigger for a later tax investigation. 

Over the past 12 months alone, we have seen a significant increase in the number of individuals and businesses being faced with in-depth enquiries into their tax affairs, amounting to significant costs to defend their cases and seek a fair and pragmatic outcome. 

Not only can tax investigations be a costly process, but they are also incredibly time-consuming and can be very stressful too, often taking many months to conclude. To ensure our clients are protected against the expenses of an investigation, we offer the opportunity to enrol with our HMRC Investigation Service. This means that should you be subject to an enquiry, as a member of our HMRC Investigation Service, the costs of having Armstrong Watson’s tax experts defend and negotiate your position with HMRC are covered, resulting in no fee charged to you - potentially saving you thousands of pounds. 

Without an appropriate level of service protection in place it’s important to recognise that from the moment the dreaded enquiry letter arrives, professional fees are likely to be incurred as your advisers will be required to help the tax inspector understand your business records and explain any technical adjustments. If you choose our service we will: 

  • Check HMRC is entitled to investigate the tax return selected and the enquiry window is still open 
  • Ensure the tax inspector only asks for information and documents relevant to the enquiry year 
  • Respond to all telephone calls, emails, letters, compliance fact sheets and notices issued by HMRC 
  • Provide supporting information from our files relating to when your accounts were drawn up 
  • Prepare for and attend face-to-face meetings with the inspector 
  • Handle any settlement negotiations through to conclusion 

Of course, those are just the fees for responding to HMRC. We will also be talking to you regularly, answering your questions and keeping you informed of our discussions with the tax inspector. It is not uncommon for tax inspectors to change during an enquiry, which without protection can lead to additional fees in assisting the new inspector to get up to speed. Taking this all into consideration, it’s easy to see how fees can escalate rapidly, so subscribing to our HMRC Investigation Service is a logical and cost-effective measure to take. 

As an added benefit of subscribing to our HMRC investigations service, you’ll also have access to a team of qualified solicitors for employment law, health and safety matters and commercial issues. 

As with any protection agreement, there are, however, circumstances that would invalidate the policy, such as actually committing furlough fraud or other tax fraud. Under circumstances where a business has deliberately committed furlough fraud then the HMRC Investigation Service would not be available. 


For more information, download our HMRC Investigations brochure

Download here

Related news

Open sign in restaurant

5 pitfalls for hospitality businesses to avoid when reopening

  • 10th May 2021
Closed Business in Hospitality Industry

Selling your Hospitality Business in the midst of COVID-19

  • 26th March 2021
Takeaway coffee

Hospitality – diversify to survive

  • 1st April 2021

The final date for claims is 14th October 2021. If you require our JRS team to submit your claims please send them to jrs@armstrongwatson.co.uk. For details on the changes to the scheme visit our CJRS page.