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At the Local District Level

HMRC does not need to have any reason for opening an enquiry.

Some Local District enquiries are opened at random as part of HMRC's way of checking a proportion of the self assessment returns which are submitted.

Other returns are pre-selected for enquiry because of a suspicion that a tax return contains errors.

The taxpayer may not discover the reason for the enquiry, but whatever the situation, it is likely to be stressful, time consuming and expensive.

Why most local investigations start

• Unusually high business expenses, for instance legal or travel costs
• Disparity between profitability of similar firms in sector/area
• Sending in Tax Returns or accounts late
• PAYE Irregularities
• Excessive use of consultants
• Large petty cash accounts

• Why investigation start
• Budget 2013
• Code of Practice 9
• Tax appeals and tribunals