Building professionals are being warned that they face greater scrutiny over tax returns.
Lenka Hennessey, a director of financial adviser Grant Thornton, said HM Customs & Revenue (HMRC) was likely to crack down on irregularities before its deadline for investigating returns on 31 January.
She said tax rules introduced in 2005 had caused confusion and the tax department was digging around “to make sure people are doing it right and make some money if they’re not”.
She added that the standard UITF40, which requires firms to file income figures earlier, had some grey areas that could result in different interpretations of valuations.
Hennessey said HMRC was particularly interested in contingency fees, partners’ personal expenses, recruitment costs in relation to the hiring of partners, and bad debts.
She said: “The level of detail that firms must respond with is far more sophisticated and lengthy than in the past.”
Hennessey expected the number of firms being investigated to rise significantly in the coming weeks.
“This is clearly a result of the recent recruitment drive by the Revenue."
Those who got it wrong could face fines and interest on inaccurate returns.
She added that she expected the number of firms being investigated to increase significantly in the next few weeks and warned finance directors to "prepare for this onslaught".
Grant Thornton expected HMRC, which has three months left to investigate 2005/06 partnership returns, to target law firms, architects and engineers, among others, as it examined expense claims before the cut-off.
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