Aspect inquiries are reaping rewards for HMRC

There was a big increase in aspect inquiries last month and accountants are now in a much stronger position to discourage their clients from understating any tax liabilities.

The aspect inquiries are mainly focused on CGT, entrepreneurs' relief, general tax planning and investment income, rather than full inquiries into an individual's entire tax return and this has led to more conviction rates and a greater awareness of tax evasion schemes. A number of loopholes have been closed and HMRC has seen more money returned to the government coffers.

It's less costly for the Revenue to undertake aspect inquiries, as they concentrate on a particular area, therefore they can carry more out. By doing this, HMRC yields similar returns as if they were undertaking fewer, but wider, investigations.

A senior manager at Abbey Tax Protection explained that if a client has estimated figures in a slapdash manner, these figures are more open to scrutiny in these target specific investigations.

A full inquiry can take around 18 months, which is costly for both the client and the Revenue at a time when HMRC needs to cut back on spending.

The permanent secretary to the Revenue, Dave Hartnett, confirmed that HMRC is now taking a more strategic approach to tax inquiries. They've decided that aspect inquiries are now more important than previously thought.

The new approach is undoubtedly working, but if government spending cuts bite to deeply and HMRC is forced to cut much needed staff, the benefits of the good work they've carried out recently might be lost.

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