The present state of the country's finances has pressured the government to reclaim as much cash as they can. For taxpayers in the middle of an enquiry, this may mean that HMRC go for a quick win: settle early and get the money in.
For taxpayers who have been dealing with an enquiry for some time, this might seem like a favourable option. But is it?
At the end of an enquiry there is often a contractural settlement. Under this contract, the taxpayer agrees that they have declared all income and pledges to pay the tax, interest and penalties: HMRC agree not to prosecute the taxpayer. From HMRC's point of view, this brings the enquiry to a neat close.
For the taxpayer, there is still a risk that they have missed something or misunderstood something. If this is discovered at a later date then the prospect of very high penalties and prosecution is incredibly real.
So take care before you accept the "easy" option of quick settlement.
