Audits by HMRC Charities - after the audit

11 What happens once the audit is finished?

11.1 On the day the audit ends, the auditor will talk to you about exactly what has been reviewed and the results of that review.

11.2 The same information will be included in a letter to the charity summarising the audit findings and what action the charity may need to consider.

11.3 If we find that less tax has been claimed than was due, our auditor will help you to make a further repayment claim.

11.4 If we cannot substantiate a tax repayment claim and, as a result, we have paid you too much, our auditor will:

• explain in detail what we believe the problem is and the formal process we need to follow to recover the tax involved;
• provide a summary of the amounts of tax recoverable for all relevant years;
• provide a computation of interest due, up to a projected settlement date;
• where appropriate, discuss the basis for any penalties we believe are due and explain HMRC policy on mitigation of the maximum penalty payable;
• offer to negotiate a settlement with the trustees by way of a suitably worded letter of offer, which when accepted by HMRC would constitute a binding agreement between us;
• discuss any payment difficulties (where appropriate, we can agree an instalment programme but the effect of interest means that this is likely to increase the total amount payable).

Usually, we will not recover tax for more than six years, prior to the year under review. However, there are circumstances when this period may be extended. If this is being considered the auditor will provide a full explanation to the trustees.

11.5 In the majority of cases, concerns arising from an audit will be resolved by discussion and an appropriate settlement will be agreed with the trustees.

11.6 If it proves impossible to settle the matter in this way, we will start formal recovery action.

11.7 Trustees will have the opportunity to appeal against any formal assessments/determinations we make.

11.8 Any wider potential risks identified during the audit will be discussed with the charity trustees and/or senior management, who will be advised how matters will be taken forward either within HMRC Charities or by another HMRC office.