Tax investigations are something that all taxpayers fear, but our latest case study intends to show that with the right support you can protect your interests.

Background

Our client faced a significant challenge when a bad debt exceeding £200,000 appeared in their accounts. HMRC flagged this due to its size and launched an investigation into its validity.

The situation

The bad debt arose because the client continued providing services after a contract expired, later invoicing for these services. The customer refused payment, leading to a lengthy legal dispute.

Eventually, an independent barrister ruled that while the client recovered a substantial portion of the debt under the original contract, the amount invoiced post-expiry was irrecoverable.

HMRC questioned whether the bad debt was genuine and whether full tax could be claimed. Without expert support, this could have resulted in:

  • Stress and disruption for the business
  • Significant professional fees
  • Delays in resolving the matter

Our work

Through our Tax Investigation Service, we managed the entire process, ensuring the client was fully protected. We:

  • Prepared a detailed timeline of events, explaining the nature of the debt and legal proceedings.
  • Supplied comprehensive supporting documentation, including:
    • Original invoices with approval signatures
    • Signed contracts
    • Legal documents relating to the claim
    • The barrister’s final decision

The outcome

After reviewing the evidence, HMRC confirmed the bad debt was valid and allowed full tax relief. The investigation was closed without additional cost or stress to the client.

HMRC investigations can happen to any business. Without protection, they can be costly and disruptive. Our Tax Investigation Service ensures:

  • Expert handling of all HMRC queries
  • No unexpected professional fees
  • Peace of mind for you and your business

For more information on our Tax Investigation Service, please get in touch, or speak to your usual Milsted Langdon contact.