A common question is when this point should be raised with HMRC.
Businesses will wish to know from the start whether any allegations have been made against them, and there is certainly no reason why the director or owner should not seek an answer.
Most compliance checks can be broken down into three stages: information gathering; analysis; and conclusion.
HMRC may be quite reasonably unwilling to disclose from the outset the reasons for the compliance review.
On balance, it is probably advisable to wait until the information stage has been completed and the identified risks have been checked. The business can then legitimately ask to know more about the reasons for HMRC’s interest in the business and its claims.
Co-operation with HMRC and its officers at all stages of the claims’ enquiry process is strongly recommended.
Businesses should always be eager to demonstrate that they took great care with the claims process and - while it is inevitable that some mistakes could have been made - these were genuine errors. Getting the strategy right from day one will minimise the disruption to the business and reduce the possibility of further action
John Hood is a tax Partner with Moore Kingston Smith
