Checklist for challenging an HMRC business
economics exercise

If HMRC challenges your accounts based on it carrying out a business economics exercise, use our checklist to identify flaws in HMRC’s assumptions and calculations.

Missing income

HMRC uses industry-specific business models to detect possible errors, deliberate or innocent, in business accounts. It uses the models to carry out a business economics exercise from which it will extrapolate alternative figures and compare these to your accounts. HMRC will concentrate on turnover and mark-up of purchases in your accounts compared to those in its model. The scope for inaccuracies in such an exercise is significant. HMRC’s calculations need to be considered in detail to identify incorrect assumptions and miscalculations.

More information about HMRC’s business economic models are available at https://www.gov.uk/hmrc-internal-manuals/enquiry-manual/em3502.

challenging a business economic exercise

Obtain a copy of HMRC’s calculations then use our Checklist for Challenging an HMRC Business Economics Exercise to help you produce a suitable response.