Re: Ltd Co. ?
In my case, I don't think I was taking the piss, although I admit in hindsight that I was an idiot. I was told I had to redeclare a years income because of a simple administrative error when filling in the dividend certificates (caused partly by the accountant I was then using being a real arse, but mainly by me not doing what he said - BTW, I was not happy using all the loopholes we wanted me to, and I was actually trying to pay more tax than he wanted).
I went in to see HMRC to discuss what I could do. The tax inspector took a hard line immediately, and would not allow the corrected certificates to be re-filed late, and as my wife was a director, they would not allow me to declare what was paid to her as salaried income, as she had not (in their words) done enough to earn that amount of money. They also would not allow me to claim that the income was paid to me not her, as it was clear that the money had been paid into her account.
When I left the confrontation, having not come to any agreement about what should be done, I was half expecting to be arrested for tax evasion (it was mentioned explicitly by the tax inspector). I had to wind down (without a drink) before even getting into the car to go home, because I would not have been safe to drive.
Fortunately, I was recommended a new accountant who came to an agreement on my behalf with HMRC, but I still ended up with a £1200 time and materials bill from the new accountant, a severance payment from the old accountant to release the books(!), and a demand for tax and NI on the redeclared income, plus a fine of the same order of magnitude as the tax bill.
Expensive, but less unpleasant than a charge of tax evasion. Whether it was a real possibility, or just a threat I do not know. This is why I say listen to your accountant and never meet HMRC by yourself. I don't blame anybody but myself (not even the bad accountant), because I know that, ultimately, the blame was mine, both legally and morally. I don't try to run my own company now, because I obviously suck at it.
I think it may be different if you are trying to sort out a problem before HMRC have actually noticed it. It may also depend on the mood and workload of the tax inspector you're seeing.