Average tax enquiry now takes three months

THE AVERAGE LENGTH of tax enquiries undertaken by HMRC’s local compliance teams into ordinary taxpayers has increased by 20% over the last year.

Data provided to tax investigations insurer PFP shows HMRC enquiries increased from  two-and-a-half months in 2012/13 to three months in 2013/14.

While the average length of an enquiry currently stands at three months, it is not unusual for them to take much longer, and in some cases can stretch on for years.

A factor in causing the elongation of investigations is the wider range of sources the taxman uses to identify potential underpayers, including: banks, local councils, the Driver & Vehicles Licensing Agency, insurers, hospitals, online sales and purchases records, and social media.

The rise in the average length of a tax enquiry also means that the cost to individuals or businesses in advisory fees for accountants and lawyers is likely to have increased, PFP claims.

Data on e-commerce transactions is also used by HMRC. It uses the information to identify high volume traders making significant undeclared revenue through auction and community selling websites like eBay and Amazon Marketplace.

PFP managing director Kevin Igoe said: “Any increase in the length of time taken for HMRC to complete a tax enquiry will be a major concern for those being investigated.”

“Innocent individuals are often drawn into tax enquiries, which are both distressing and costly, so a 20% jump in the average time taken means a rise in levels of stress and cost to the potentially innocent individual.”