Introduction to this document

Enquiry - challenging a business economics exercise

There can be many reasons for challenging an HMRC business economics exercise, but you must have good grounds for doing so.

Are your records deficient?

HMRC’s business economics exercise approach to increase taxable profits cannot be justified unless the records have been shown to be deficient in some way. An inspector should be able to demonstrate that:

(1) There are deficiencies in the records.

(2) The results shown by the accounts are not credible.

(3) Drawings are inadequate.

The fewer of these features present, the more the inspector’s decision to base their attack on a business economics exercise should be challenged. So use our Enquiry - Challenging a Business Economics Exercise letter if you want to negotiate this way.