Settlement
Settling with HMRC, whether through voluntary restitution or during an open enquiry, is a viable option. A settlement can take various forms, from time-to-pay arrangements to agreeing on a tax figure. It is crucial to scrutinise any proposed figure from HMRC for potential errors, whether in the tax basis or arithmetic. Settling with HMRC can be a lengthy and often stressful process. Engaging with a professional can assist with the process, ensuring that you, as the client, achieve the most favourable and accurate outcome.
Closure notices
For those unwilling to settle but seeking resolution, applying to the First Tier Tax Tribunal (FTT) for a Closure Notice is an alternative. This order compels HMRC to conclude its tax enquiry within a set period, usually between 3 and 6 months. This approach can be effective, especially with widely used schemes, as it accelerates decision-making and can be a powerful settlement tool when used correctly. This option is only available to those who have an enquiry with HMRC.
Waiting
If there is no immediate need for action, waiting for HMRC to conclude an enquiry is an option. However, prolonged enquiries may result in larger tax bills due to accruing penalties and interest. The threat of Accelerated Payment Notices (APN) or Follower Notices (FN) also looms, potentially requiring taxpayers to settle outstanding taxes on short notice. Just because you have not heard from HMRC for a long period certainly does not mean that the enquiry has gone away.
