Since 2012 HMCR has introduced new measures to tackle tax evasion including:

• taskforces that focus on high-risk sectors in areas where there is strong evidence of tax evasion

• working with authorities offshore

• targeting people who earn more than £150,000 and those with wealth of between £2.5 million and £20 million

• publicly naming deliberate defaulters

According to HMRC, compliance checks are usually triggered when figures entered on a return appear to be wrong or when a small business suddenly makes a large claim for VAT, or one with a large turnover declares a small amount of tax.

However it can also be all or some of the following:

• HMRC receives a tip-off

• you work in a high-risk industry, for example one that routinely takes cash payments

• you have a large fall in income, increase in costs or there are inconsistencies between different returns

• you file your returns consistently late

• your costs are above the industry norm

• your tax returns are inconsistent with your standard of living

• you are in a sector that HMRC has decided to target

• entirely at random

Five tips for avoiding an inspection:

1. File your tax returns accurately and on time

2. Keep good records. An accountant can prepare your annual accounts but they can only work with the information you give them. Make bookkeeping a priority

3. Pay any tax due on time. Make sure you have money set aside to cover the costs.

4. Ask a professional if you are unsure about any element of your finances at any point during the year. Don't wait until the deadline to start asking questions.

5. Explain any changes or unusual activity from one tax year to the next such as large fluctuations in profits.

Contact us to find out more about dealing with HMRC investigations – Alastair Byrne, JWPCreers LLP, 01904 717260 or email ajb@jwpcreers.co.uk