Being the subject of a tax investigation is one of life' less pleasant experiences, but one that is becoming more common as the introduction of self-assessment a few years ago means that the Inland Revenue now makes random checks on taxpayers returns. This also means that being the subject of a tax investigation does not necessarily mean that the Inland Revenue has evidence of wrongdoing and in most cases honesty is the best policy as a co-operative attitude will often reduce any penalties that the Inland Revenue imposes.
Take advice before dealing with the Inland Revenue on an investigation
However, there are still pitfalls in this approach and this does not mean that you should deal with the Inland Revenue without taking professional advice. In more straightforward cases, this is likely to be provided by your accountant, but more serious and/or complex circumstances, may require the technical and negotiating skills of a lawyer. Recent legislation such as the Human Rights Act has re-balanced the law a little in favour of the taxpayer in these situations, and communications between you and your lawyer are more likely to be protected by professional privilege (and therefore protected from being disclosed to the Inland Revenue) than your dealings with other professional advisers.
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