HMRC investigation? Let us help protect your interests
Tax Investigation Management
Tax investigations by HMRC often come as an unpleasant shock for many and can be very stressful.
From the outset communication from HMRC can be quite intimidating as they tend to take an aggressive position and “throw the book”. The enquiry will often embrace many aspects of the business and will typically take the form of a standard template letter padded out in parts by reference to the particular client.
In other cases HMRC will issue a letter which on the face of it looks benign but has far reaching implications if not handled correctly.
At Shipleys we are non-judgmental, vigorous in defending our clients and aim to resolve the investigation in the most efficient manner possible without compromising the quality of our work.
We have the experience and know-how to handle local district cases to large tax fraud cases both in direct and indirect tax (VAT).
And with Shipleys Tax Fee Protection Partner our clients have peace of mind that in the event of an enquiry all professional fees up to the First Tier Tribunal are covered.
Sections
- Areas
- First steps
- How we can help
- How do HMRC investigate a business?
- What are the trigger points to look out for?
Areas
Some of the areas in which we regularly assist clients are:
- Code of Practice 9
- Code of Practice 8
- Voluntary Disclosures to HMRC (Onshore)
- Compliance Checks
- Negotiated Settlements with HMRC
First steps
- You need to know what your rights are under enquiry
- Identify and prioritise of areas of primary concern
- Assemble and analyse relevant information and evidence in order to quantify the correct tax liability
- You need advice on what HMRC can ask you to produce – whether you have to provide copies of documents and soft copies of electronic files for example
- You need an assessment of your accounting systems to know if it is robust enough to withstand scrutiny
- You want to reduce the risk of an investigation going forward and improve compliance procedures.
How we can help
- Our team consists of highly experienced ex-HMRC Inspectors
- We can influence and control the pace of investigation
- Our specialist knowledge will be utilised to challenge any incorrect assumptions made by HMRC
- Comprehensive Fee Protection insurance for clients
Remember early intervention by a tax investigation specialist could resolve the dispute relatively quickly; what not do to is to attempt to correspond with the tax man yourself as you could unknowingly put the proverbial “foot in it”.
Are under enquiry? Do you think you are at risk of an investigation? Contact us now for independent advice on your options.
HOW DO HMRC INVESTIGATE A BUSINESS?
Some tax investigations are random but increasingly the majority are as a result of HMRC’s risk analyses/assessments.
This “risk assessment” process typically compares the results of the business to other similar businesses; it statistically analyse areas such as gross profit margin, mark-up rate and comparisons to earlier years. Where a case is “risk assessed” HMRC cannot decline the invitation to investigate.
Even where HMRC know that there was “nothing in it for them”, officers have openly admitted that they have no choice but to open an enquiry because the risk assessment process had identified the case as warranting an enquiry.
What are the trigger points to look out for?
The short answer is patterns and, to a certain extent, timing.
Timing
Most accountants are unaware that whilst HMRC can launch an investigation into a business at any time within the statutory timeframe, enquiry notices are usually timedto be issued at specific times of the year in order to control work flow. Favoured times for issuing enquiry notice are the end of January (accountants busy with heavy workloads) and Fridays (clients receive a shock when opening post on a weekend!).
Nowadays, HMRC typically impose a non-statutory time limit on the taxpayer for producing information requested in the opening letter. Often it will not be possible to provide this within the time frame specified, and it is advisable to make contact very quickly with HMRC if this is the case. This is important in both establishing a relationship with the officer dealing with the enquiry and also gaining maximum penalty mitigation for cooperation in the event there is culpability.
Patterns
HMRC expect to see consistency across a business, both within the business itself and also across similar sectors. It will expect turnover to be fairly level whilst accepting modest fluctuations in either direction. If turnover goes down it will expect expenses to decrease. If profit decreases HMRC will query if proprietors’ drawings/directors remuneration increases. This crude analysis tool is often misleading and belies the actual reasons for fluctuations leading to businesses that have nothing to hide being flagged up for enquiry.
For example, if turnover increases substantially HMRC may conclude that maybe not all of the turnover in the previous year was declared. Or if it drops significantly then maybe some has been taken by the owner and not declared? The reality maybe that turnover has increased due to having a exceptionally good year and decreased because of a loss of a large customer or order.
Suspicion is also aroused if the claim in respect of administration expenses increases well beyond what would be expected comparing it with the previous year. HMRC will wonder whether hours have increased (hence the increase in admin expenses) and therefore the officer will wonder why turnover has gone down.
Proprietors’ drawings – a substantial increase could mean that drawings may have been understated in the past, leading HMRC to query whether any cash takings have not been declared. Similarly, if the drawings are less than the salary paid to the highest paid employee HMRC will be very uneasy – business owners are expected to be the highest earners in the business even though the reality is most proprietors in business start ups do not take any drawings in the formative years.
Gross profit margins (GPR) – typically the GPR of the business will be examined over a period of up to 6 years to see whether or not it is consistent. It will also be compared to similar businesses and fluctuations of more than a few percent will arouse suspicion. HMRC has access to a vast database of information indicating what the GPR of a particular type of business should be.
Invoices – An officer will scrutinise invoices carefully to check whether part of the invoices are being paid in cash to disguise the true GPR.
Sectors – HMRC will often target a particular sector because it has become aware of consistent malpractice across the sector. For example, Medical practices, dentists and vets are targeted because they engage locums as self- employed workers whereas in reality it is difficult to show that a locum is self- employed in many typical practices.
Professional footballers and their clubs have been under scrutiny for a few years now mainly because in some cases a player will receive a payment for the exploitation of his “image rights” and HMRC does not approve of this because it reduces or in some cases completely avoids liability to UK tax by devising a structure which holds the image rights offshore.
Umbrella companies and IT agencies using “one-man band” IT companies have been under the microscope for a long time (see IR35), mainly because it is considered that many of them are purportedly engaged as self- employed workers but the reality is that they can be deemed to be employees.
Standard of living – does an individual have the means to finance his/her standard of living? Information will be gained in this regard from a variety of sources, giving HMRC details of property owned, cars, boats, bank accounts, horses etc. Although there will often be perfectly reasonable explanations as to how such assets may have been acquired it may not stop HMRC delving further.
People often think they can outwit HMRC and stay one step ahead. However, they should be well aware of that most of the tricks which the unscrupulous businessman may try has been seen and dealt with by HMRC many times over and they underestimate HMRC at their peril.
If you require help with tax or VAT investigations then speak to our experts on 0114 272 4984 or email info@shipleystax.com.
Latest news & blogs…
Incorporating your Property Portfolio for Tax Planning
IN THE PAST decade, the UK property market has quietly undergone a structural revolution. What began as a tax-driven shift among higher-rate landlords has now become a mainstream trend — with over 70% of new buy-to-lets purchased through companies, and a growing number of investors treating their portfolios as businesses rather than side investments.
The reasons are clear. Frozen tax thresholds, rising mortgage rates, and the unpopular Section 24 restriction on mortgage interest relief have all squeezed traditional landlords, while larger and more professional investors — including overseas buyers and family offices — have quietly moved towards corporate ownership. This allows for lower tax rates, full deductibility of finance costs, and greater flexibility in reinvestment and succession planning.
At the same time, institutional capital continues to pour into the UK’s build-to-rent sector, with pension funds, private equity, and sovereign wealth investors acquiring or developing rental stock at scale. The message is unmistakable: whether you’re a single investor or managing a multi-million-pound portfolio, the property landscape now rewards structure, strategy, and scale.
…over 70% of new buy-to-lets are purchased through companies, and a growing number of investors treating their portfolios as businesses rather than side investments.
However, incorporating property holdings is not a straight forward exercise. The potential tax benefits — from Corporation Tax savings to mortgage interest relief and succession planning — must be balanced against complex rules on Capital Gains Tax (CGT), Stamp Duty Land Tax (SDLT), and legislative anti-avoidance. Done correctly, it can transform how you manage and grow your portfolio. Done wrong, it can trigger large unexpected tax bills and HMRC scrutiny.
In today’s Shipleys Tax insight, we take a closer look at when, how, and whether property investors, landlords, and developers — in the UK and abroad — should consider incorporating their portfolios, and how to structure the move in a way that is commercially robust, compliant, and future-proof.
The shifting sands…
UK investment property is increasingly held through companies, not personal names. Various datasets show the direction of travel:
- 70–75% of new buy-to-let purchases now go into companies, and the stock of company-owned BTLs keeps rising.
- 2025 has seen a surge in newly incorporated BTL companies (c. 67k expected), including more international landlords using UK companies.
- On the institutional side, Build-to-Rent continues to scale: 2025 updates show rising capital deployment and a deepening pipeline of professionally managed rental homes — i.e. corporate ownership at scale.
Why this matters: whether you own five units or fifty, the market (and lenders) increasingly assumes a corporate wrapper. That doesn’t mean incorporation is always right—but it does mean you should evaluate it properly.
Why more investors are going limited – summary points
- Tax rate arbitrage (corporation vs personal): Company profits are taxed at 19–25%, versus personal rates up to 45% for landlords.
- Finance cost deductibility: Companies can still deduct 100% of mortgage interest (unlike Section 24-restricted individuals).
Company profits are taxed at 19–25%, versus personal rates up to 45% for landlords.
- Reinvestment & scale: Retaining profits inside the company can make it easier to fund capex and acquisitions (and often plays better with lenders as your portfolio grows). Industry evidence shows professional/portfolio and institutional investors are leaning this way.
- Succession options: With the right share design, you can plan control, income and eventual handover far more neatly than with personally-owned bricks and mortar.
Institutions are not doing this by accident. The rise of professionally managed rental (BTR/single-family) is a clear signal that corporate ownership is the default for scalable portfolios.
Property tripwires
Moving assets from you to your company can trigger tax and lending events. Common pitfalls we regularly help clients avoid:
- CGT at market value on transfer unless qualifying reliefs can be applied.
- SDLT on the company’s acquisition price, including surcharges — partnership routes and genuine business status matter.
Moving assets from you to your company can trigger tax and lending events
- Mortgage reset risk: lenders may re-price or require a new facility when title changes.
- Anti-abuse scrutiny: “form-over-substance” restructures invite HMRC challenge.
These can often be managed with commercially robust planning—but only if mapped before you pull the trigger.
Where Shipleys Tax advice fits
Shipleys Tax act for landlords, developers and cross-border investors who want the benefits of a company without the nasty pitfalls:
- Feasibility modelling: side-by-side projections (personal vs company) so you can see the real after-tax outcome.
- Reliefs & route selection: assessing whether you’re a genuine property business, if partnership routes make sense, and how to minimise/mitigate CGT/SDLT on transfer.
- Banking & debt coordination: working with your broker/lender so finance aligns with the structure (and the timetable).
- Succession & wealth planning: company share design, Family Investment Company (FIC) options, and clean governance for future exits.
- Ongoing compliance: accounts, corporation tax, VAT where relevant—and steady optimisation as rules shift.
Conclusion
Incorporating your property portfolio isn’t a simple formula — but for many serious investors, it has become the foundation of modern, scalable property investment. A company structure can open the door to lower tax rates, full finance deductibility, reinvestment flexibility, and far more controlled succession planning.
However, success lies not in the decision but in the execution. The process must be commercially justified, carefully modelled, and compliant with HMRC’s rules on reliefs and anti-avoidance. A poorly timed or poorly structured incorporation can easily erode the very benefits it was meant to deliver.
At Shipleys Tax, we specialise in helping landlords and investors navigate that fine line — turning complex legislation into practical, tax-efficient strategies.
For further assistance or queries, please contact:
Sheffield: 0114 303 7076 Leeds: 0113 320 9284 Manchester: 0161 850 1655
Email: info@shipleystax.com
Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.
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HMRC Can Now Raid Bank Accounts Directly
HMRC HAS REVIVED powers allowing it to take money directly from taxpayers’ bank accounts to settle unpaid tax debts. These so-called “direct recovery” powers apply to debts over £1,000, though HMRC must leave at least £5,000 across your accounts after any deduction.
While HMRC insists this is targeted only at “persistent non-payers”, the move is a serious escalation in debt collection and risks catching out individuals and businesses who may not realise they have an outstanding liability.
In today’s Shipleys Tax brief, we summarise how it works, the safeguards in place, and what you should do to protect yourself.
HMRC has revived powers allowing it to take money directly from taxpayers’ bank accounts to settle unpaid tax debts
What’s Happening?
HMRC has re-started use of its Direct Recovery of Debts (DRD) powers, allowing it to take money directly from taxpayers’ bank accounts where tax bills remain unpaid.
According to HMRC’s own briefing, updated 22 September 2025, DRD is again being used after being paused during the pandemic (HMRC – Issue Briefing: Direct Recovery of Debts).
These powers apply to debts of £1,000 or more, but HMRC must leave at least £5,000 across your accounts after any deduction. The rules are set out in HMRC’s policy paper on DRD (HMRC policy paper).
Why Now?
The scheme was first legislated previously but paused during Covid. HMRC has now confirmed DRD is being reintroduced on a “test and learn” basis to help tackle rising levels of unpaid tax.
Professional advisers have warned that while the target is “persistent non-payers”, errors, disputed liabilities, or overlooked correspondence could mean ordinary taxpayers are at risk if they don’t engage early with HMRC.
These powers apply to debts of £1,000 or more, but HMRC must leave at least £5,000 across your accounts after any deduction
What Does This Mean for You?
- All taxpayers are potentially affected — individuals, landlords, and businesses.
- Outstanding debts as low as £1,000 can trigger DRD action.
- Safeguards exist (such as notice, objections and appeals), but the process relies on HMRC’s accuracy.
For clients, this means you should:
- Review your HMRC correspondence and ensure no liabilities are outstanding.
- Deal with disputes early before HMRC escalates collection.
- Get professional advice if you receive a DRD notice.
How Shipleys Tax Can Help
At Shipleys Tax, we specialise in defending clients against HMRC enforcement action. We can:
- Negotiate affordable payment arrangements before HMRC acts.
- Challenge incorrect or disputed demands.
- Protect your cashflow and ensure safeguards are applied properly.
Conclusion
Don’t wait until HMRC knocks on your door (or bank account). If you have unresolved tax issues — even relatively small debts — now is the time to act.
Book a confidential consultation with Shipleys Tax today to safeguard your finances and gain peace of mind against any HMRC enforcement action.
HMRC Direct Recovery of Debts – Frequently Asked Questions
Can HMRC really take money directly from my bank account?
Yes. Under its Direct Recovery of Debts (DRD) powers, HMRC can instruct banks and building societies to transfer unpaid tax directly from your accounts. This power was re-started in September 2025 after being paused during the pandemic.
How much must HMRC leave in my account?
HMRC must leave you with at least £5,000 across all accounts after any deduction. The powers only apply where the debt owed is £1,000 or more.
Will HMRC warn me before taking money?
Yes. HMRC must give you advance notice and an opportunity to object or appeal before any funds are recovered. They will also assess whether you are “vulnerable” and require additional support.
What if I dispute the debt?
If you disagree with HMRC’s figures or the debt is under appeal, you can challenge the action. Professional advice is strongly recommended — errors and disputes can and do occur.
Who is most at risk?
Anyone with unresolved HMRC liabilities could be affected — individuals, landlords, self-employed workers, and businesses. While HMRC says DRD targets “persistent non-payers”, the safest approach is to resolve outstanding matters early.
For further assistance or queries, please contact:
Sheffield: 0114 303 7076 Leeds: 0113 320 9284
Email: info@shipleystax.com
Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.
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NHS Doctors Pensions Error could trigger tax penalties – what you need to know
DOCTORS AND NHS medical professionals may be hit with tax penalties after the NHS Business Services Authority (NHSBSA) admitted to “gross errors” in calculating pension contributions, according to reports. According to the British Medical Association (BMA), nearly 800 doctors were issued with incorrect pension savings statements for the 2023/24 tax year.
In today’s Shipleys Tax brief we look at the latest NHS pension blunder that has left many doctors and consultants at risk of HMRC penalties. Errors in annual allowance calculations mean some GPs cannot finalise their tax returns on time, creating unnecessary stress and possible charges. Here’s what’s gone wrong, why it matters, and—most importantly—what to do now.
What’s gone wrong?
According to the BMA, at least 757 doctors were issued incorrect 2023/24 Pension Savings Statements (PSS). The error relates to the opening value for 2023/24, which was wrongly increased by an extra 1.5% on top of the 10.1% CPI revaluation set by law. This produced incorrect Pension Input Amounts (PIAs) and has made accurate self-assessment difficult for affected clinicians. The NHSBSA has acknowledged the error and indicated the PIA shown was lower than it should have been.
The error relates to the opening value for 2023/24, which was wrongly increased by an extra 1.5% on top of the 10.1% CPI revaluation…
What does HMRC say?
HMRC allows you to file on time using the best available (provisional) figures and amend within 12 months of the filing deadline without a late-filing penalty. Do note that interest can still apply if extra tax becomes due on amendment. NHSBSA guidance mirrors this approach for affected members.
Annual allowance refresher – why this is an issue
- Standard annual allowance: £60,000.
- Tapered allowance: if threshold income > £200,000 and adjusted income > £260,000, the allowance tapers down to a minimum of £10,000 at higher adjusted incomes.
Practical steps for doctors to take now
- Identify if you’re affected – check your 2023/24 PSS and any NHSBSA letters; note the 1.5% opening value issue.
- File by the deadline using estimates – protect yourself from late-filing penalties; diarise to amend within 12 months when the corrected PSS arrives.
- Retain evidence – keep NHSBSA/BMA correspondence and workings you used for your estimate.
- Re-work your position – use payslips and prior statements to sense-check likely PIA and possible carry-forward.
- Use carry-forward – bring in unused allowances from the previous three years to reduce any annual-allowance charge (where eligible).
- Assess taper risk – if you’re around the £200k–£260k thresholds, get advice to avoid inadvertent taper traps.
- Claim your costs – if you’ve incurred extra accountancy fees or interest solely because of this error, the NHSBSA will consider reimbursement. Keep invoices and bank proof.
- Amend promptly – when your corrected PSS arrives, submit the amendment to limit interest and tidy up your records.
File by the deadline using estimates – protect yourself from late-filing penalties; amend within 12 months when the corrected PSS arrives…
Why this matters for medical professionals
The NHS pension is a major and valuable benefit. However, complex annual allowance and taper rules can create unexpected tax charges and discourage extra sessions—administrative errors only make the situation worse. Specialist advice helps ensure you pay the right tax—no more, no less.
Conclusion – take professional advice
At Shipleys Tax, we specialise in advising GPs, consultants and healthcare professionals on NHS pension tax. We regularly:
- Check, amend and appeal incorrect pension tax calculations;
- Structure earnings to minimise annual-allowance exposure and protect retirement wealth;
- Handle filings on time—even where provisional figures are needed—and tidy up once corrected data arrives.
Concerned about your NHS pension statement or potential tax penalties? Contact us below:
Sheffield: 0114 303 7076 Leeds: 0113 320 9284
Email: info@shipleystax.com
Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.
Want more tax tips and news? Sign up to our newsletter below.
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