| WAMS Tax Ltd |
| Don't Let them Bully You - They are not always right |
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| Why Use Me? Well I know what some of them get up to |
Did you not have the time in the annual January returns rush or miss the opportunity to ask
your client "are there any other "irregularities" that slipped your mind when you were
busy getting the previous years returns filed and always meant to raise it sometime. Then
one year led to another and then it became too much to think about.
Also remember that your client may well feel embarrassed at having not only hidden
earnings etc from the taxman but having deceived you.
A good opportunity to get Bill Stevenson's expertise on board (call 07751 720507 anytime)
and save you both difficulties while ensuring that you still retain the client for the
future. WAMS Tax Ltd does not do tax returns so there is no fear of Bill poaching your client
for the future.
OK so the information is correct - does that mean that there has been tax underpaid?
Clearly we would have to think out the simple explanations and the ways that could make it
all OK.. We might for example think of things like
(i) is domicile and remittances basis prior to 5th April 2008 relevant and
(ii) there might be no tax lost.
It would in these circumstances be totally inappropriate to send your clients documents that
are not required in relation to any tax liability. Equally the funds in the account may have no
taxation implications at all and have been put in an offshore account by a non-UK domiciled
person with none ever been even used or enjoyed abroad let alone in UK. There are also
other reasons that there might be no unpaid tax but too voluminous to list here. Just
because your client hasn't got the records or evidence doesn't make the monies taxable......
Inspectors will of course try and argue otherwise
Return or no return - think about whether your client has in fact filed a return for all years.
This would change the nature of any ultimate offence should one still exist at this point.
The Game is up -So we haven't managed to get our client out of the mire yet and yes
he/she/they/it should have returned the overseas interest at least in their returns. Would
there be any tax liability if the income was now included?
- No - we can still get our client off the hook and we don't need to acquiesce to the HMRC
demands.
- Yes - but we also need to think further and not prejudice our client's rights and get
penalties at the lowest possible level.
Is it 'Discovery'? - Presumably - and of course HMRC doesn't always lay out its full basis
for such god given rights to make such demands - the officer is here proceeding on the
basis of "discovery" but wait a moment. What has he/she discovered? Watch out for that
dreaded Schedule 36 notice when HMRC are just not as sure of their discovery as they
would normally be (or they want to get all the documents without showing their hand). This is
their usual trick so that if you do not have a "reasonable" appeal you end up giving the
documents or paying penalties.
They need to discover that profits or income have been understated and so far all they have
alleged is that your client had an offshore bank account. This in itself probably only leads to
a likelihood that Case V interest may have been understated. If so, all you need to do is
disclose that the source has in fact been omitted. This does not give them the right to see all
and every entry on a bank statement. If therefore for example you were to provide a
statement from the financial institution that interest of the following amounts to the 5th April
each year (from the date the account was opened) were earned and omitted this would
satisfy and comply with all that might be "reasonably" required to resolve the issue.
OF COURSE you may well reasonably take the line that you should leave them to
take whatever discovery course they think fit and just not respond - this is not
generally recommended but is of course an option if they have got it horribly wrong as can
happen. The only recourse would be for them to make whatever discovery assessments
they could to the best of their judgement and ability and then you could appeal and take
matters forward as considered appropriately in the best interests of your client.
You would then have them in the situation of having to self scrutinise their actions and
realise that you are not going to be bullied into putting your PI policy at risk. Do otherwise
and you could be criticised for handing over documents and giving information that was not
statutorily required.
Remember that "discovery" only presently enables the HMRC to make
assessments it does not give them an automatic right to see documents that might enable
them to make the discovery that income has been under-assessed and tax unpaid. The
position changed however from 6th April 2009 when the new Schedule 36 provisions
enabled them to search out discovery by reasonable requests for documents and
information. You might want to force them to put their thinking caps on - and ingenuity to the
test - and require the making of the assessments. Appeals might result in your client also
discovering what they have got. OK I know this is a remote possibility but you never know
and a little bit of out of the box thinking sometimes helps.
If of course your client has been neglectful and the offshore bank accounts held not
only the untaxed interest but also taxable - but untaxed - profits kept from the clutches of the
exchequer then of course you also require to both advise the client not only about the
statutory position - as laid out above in relation to the requests for documents etc – BUT
more pertinently the advisability of making an early and full disclosure of irregularities to
HMRC to keep the possible penalties and interest bill down. Reluctance to take a
reasonable line in this scenario may well harden attitudes and in the end be counter
productive to getting your client the best and quickest deal that could be going.
While this article has been inspired by a loosely and presumptuously worded letter from one
of the HMRC staff it did make me realise that this was in fact the second such request I had
seen in a matter of weeks. Equally it smacked in the same letter of an accounts enquiry
being generated just because they had information relating to earlier years. What
suggested this? Well it was the request for a full analysis of the £60 General expenses and
just over £1,000 Travelling and subsistence and a full A4 sheet of requests about balancing
and estimated figures where the taxpayer had included on the return an explanation that
accounts had not been prepared. A possible failure of the Inspector to actually look at the
tax return submitted and best practice required them to do this before opening an enquiry
We should not encourage HMRC to cut the corners and allow them to bully us into
giving them something that the Acts did not envisage.
Conversely of course remember that in addition to the normal enquiry avenue they can
have requests for information made under their formal Schedule 36 powers. You
do not really want to be forcing them down those routes as they can be expensive
to undo should it all go horribly wrong or you don’t realise that you cannot
“appeal” such notices without the extremely expensive judicial review route if
their actions are seen as reasonable. It might also harden attitudes and make an
otherwise acceptable explanation of non taxable receipts take on a full taxable mantle (in the
Inspector's eyes).
This article hopefully will prod your thoughts when the next "we have information" letter lands
on your desk. If you find that you need a specialist tax investigation adviser please feel free
to contact Bill Stevenson on 07751 720507 who will be pleased to get involved to
whatever extent is considered mutually beneficial to the client. This could be from
(i) taking the whole enquiry process off your hands - but leaving the control of the day to
day and continuing client with yourself (I am not interested in stealing clients)
and/or
(ii) through to providing a second opinion either orally or in writing
Bill Stevenson
I am sure that after the New Disclosure Opportunity ends we will be in for a spate of similar
abuses of their powers . Of course in future they will be able to make informal and formal
approaches "to test the water" so we will need to be on our toes and vigilant. If you need
help contact Bill on 0775 172 0507
We will also have registered doctors and dentists coming under scrutiny for their
Tax Health Plan and rumours about small accountants coming under the
microscope also have been heard. Interesting times ahead no doubt
Equally you can use the Feedback Form to send me a note of your problem and what you
would want by way of advice (remember to give your phone contact number)
your client "are there any other "irregularities" that slipped your mind when you were
busy getting the previous years returns filed and always meant to raise it sometime. Then
one year led to another and then it became too much to think about.
Also remember that your client may well feel embarrassed at having not only hidden
earnings etc from the taxman but having deceived you.
A good opportunity to get Bill Stevenson's expertise on board (call 07751 720507 anytime)
and save you both difficulties while ensuring that you still retain the client for the
future. WAMS Tax Ltd does not do tax returns so there is no fear of Bill poaching your client
for the future.
OK so the information is correct - does that mean that there has been tax underpaid?
Clearly we would have to think out the simple explanations and the ways that could make it
all OK.. We might for example think of things like
(i) is domicile and remittances basis prior to 5th April 2008 relevant and
(ii) there might be no tax lost.
It would in these circumstances be totally inappropriate to send your clients documents that
are not required in relation to any tax liability. Equally the funds in the account may have no
taxation implications at all and have been put in an offshore account by a non-UK domiciled
person with none ever been even used or enjoyed abroad let alone in UK. There are also
other reasons that there might be no unpaid tax but too voluminous to list here. Just
because your client hasn't got the records or evidence doesn't make the monies taxable......
Inspectors will of course try and argue otherwise
Return or no return - think about whether your client has in fact filed a return for all years.
This would change the nature of any ultimate offence should one still exist at this point.
The Game is up -So we haven't managed to get our client out of the mire yet and yes
he/she/they/it should have returned the overseas interest at least in their returns. Would
there be any tax liability if the income was now included?
- No - we can still get our client off the hook and we don't need to acquiesce to the HMRC
demands.
- Yes - but we also need to think further and not prejudice our client's rights and get
penalties at the lowest possible level.
Is it 'Discovery'? - Presumably - and of course HMRC doesn't always lay out its full basis
for such god given rights to make such demands - the officer is here proceeding on the
basis of "discovery" but wait a moment. What has he/she discovered? Watch out for that
dreaded Schedule 36 notice when HMRC are just not as sure of their discovery as they
would normally be (or they want to get all the documents without showing their hand). This is
their usual trick so that if you do not have a "reasonable" appeal you end up giving the
documents or paying penalties.
They need to discover that profits or income have been understated and so far all they have
alleged is that your client had an offshore bank account. This in itself probably only leads to
a likelihood that Case V interest may have been understated. If so, all you need to do is
disclose that the source has in fact been omitted. This does not give them the right to see all
and every entry on a bank statement. If therefore for example you were to provide a
statement from the financial institution that interest of the following amounts to the 5th April
each year (from the date the account was opened) were earned and omitted this would
satisfy and comply with all that might be "reasonably" required to resolve the issue.
OF COURSE you may well reasonably take the line that you should leave them to
take whatever discovery course they think fit and just not respond - this is not
generally recommended but is of course an option if they have got it horribly wrong as can
happen. The only recourse would be for them to make whatever discovery assessments
they could to the best of their judgement and ability and then you could appeal and take
matters forward as considered appropriately in the best interests of your client.
You would then have them in the situation of having to self scrutinise their actions and
realise that you are not going to be bullied into putting your PI policy at risk. Do otherwise
and you could be criticised for handing over documents and giving information that was not
statutorily required.
Remember that "discovery" only presently enables the HMRC to make
assessments it does not give them an automatic right to see documents that might enable
them to make the discovery that income has been under-assessed and tax unpaid. The
position changed however from 6th April 2009 when the new Schedule 36 provisions
enabled them to search out discovery by reasonable requests for documents and
information. You might want to force them to put their thinking caps on - and ingenuity to the
test - and require the making of the assessments. Appeals might result in your client also
discovering what they have got. OK I know this is a remote possibility but you never know
and a little bit of out of the box thinking sometimes helps.
If of course your client has been neglectful and the offshore bank accounts held not
only the untaxed interest but also taxable - but untaxed - profits kept from the clutches of the
exchequer then of course you also require to both advise the client not only about the
statutory position - as laid out above in relation to the requests for documents etc – BUT
more pertinently the advisability of making an early and full disclosure of irregularities to
HMRC to keep the possible penalties and interest bill down. Reluctance to take a
reasonable line in this scenario may well harden attitudes and in the end be counter
productive to getting your client the best and quickest deal that could be going.
While this article has been inspired by a loosely and presumptuously worded letter from one
of the HMRC staff it did make me realise that this was in fact the second such request I had
seen in a matter of weeks. Equally it smacked in the same letter of an accounts enquiry
being generated just because they had information relating to earlier years. What
suggested this? Well it was the request for a full analysis of the £60 General expenses and
just over £1,000 Travelling and subsistence and a full A4 sheet of requests about balancing
and estimated figures where the taxpayer had included on the return an explanation that
accounts had not been prepared. A possible failure of the Inspector to actually look at the
tax return submitted and best practice required them to do this before opening an enquiry
We should not encourage HMRC to cut the corners and allow them to bully us into
giving them something that the Acts did not envisage.
Conversely of course remember that in addition to the normal enquiry avenue they can
have requests for information made under their formal Schedule 36 powers. You
do not really want to be forcing them down those routes as they can be expensive
to undo should it all go horribly wrong or you don’t realise that you cannot
“appeal” such notices without the extremely expensive judicial review route if
their actions are seen as reasonable. It might also harden attitudes and make an
otherwise acceptable explanation of non taxable receipts take on a full taxable mantle (in the
Inspector's eyes).
This article hopefully will prod your thoughts when the next "we have information" letter lands
on your desk. If you find that you need a specialist tax investigation adviser please feel free
to contact Bill Stevenson on 07751 720507 who will be pleased to get involved to
whatever extent is considered mutually beneficial to the client. This could be from
(i) taking the whole enquiry process off your hands - but leaving the control of the day to
day and continuing client with yourself (I am not interested in stealing clients)
and/or
(ii) through to providing a second opinion either orally or in writing
Bill Stevenson
I am sure that after the New Disclosure Opportunity ends we will be in for a spate of similar
abuses of their powers . Of course in future they will be able to make informal and formal
approaches "to test the water" so we will need to be on our toes and vigilant. If you need
help contact Bill on 0775 172 0507
We will also have registered doctors and dentists coming under scrutiny for their
Tax Health Plan and rumours about small accountants coming under the
microscope also have been heard. Interesting times ahead no doubt
Equally you can use the Feedback Form to send me a note of your problem and what you
would want by way of advice (remember to give your phone contact number)
| Bill Stevenson - Managing Director |
| Mobile:- 07751720507 or 01224 658962 bill@wamstaxltd.com |
| Bill Stevenson He can do it for you!! |
| My aim is to get your enquiry settled in the shortest time I can manage and for best |
deal with matters. They may unwittingly also draw blood go
beyond their remit and go off on a fishing trip even.
HMRC have loads of information regarding
(a) offshore bank accounts (meaning any bank account
not based at a UK branch)
(b) medical professionals
(c) landlords and property sellers
(d) internet traders
(e) plumbers and heating engineers
(f) others too numerous to mention here
and will eventually get round to using it.
For professionals this is also a difficult period and even
though you have taken proper care and attention your
acceptance of HMRC demands could lead to trouble not
only for your client but also potentially your PI policy.
Taxpayers reading this may also better understand the
need to have a tax adviser on your side when the HMRC
come a "knocking" or drop that fateful letter through the
letter box.
There has to be a suspicion from what I have seen that
they are trying to cut corners and get you to provide things
that they wouldn't normally be entitled to.
THEY SHOULD NOT BE ALLOWED!!! ..- see Bill if you
need advice or a second opinion call 07751720507
The scenario goes with the initial letter -
HMRC have information that you have had an [offshore
bank account/property/internet account] at some time in
the past. Please provide copies of all your [offshore bank
account/property/internet account] accounts held at any
time in the last 6 years"
Have you received a letter like this and what should you
do? OK don't panic it will probably be directed at one of
your clients unless you have been unwise enough to invest
outside Switzerland/ Panama /Andorra etc. or you've been
selling cars on ebay
You might of course be inclined to contact the client, get
the statements and send them off to HMRC. HOWEVER
Stop there!!! Why should you?
All the letter from HMRC says is that they hold information
and are they not being a bit naughty - read on below.
beyond their remit and go off on a fishing trip even.
HMRC have loads of information regarding
(a) offshore bank accounts (meaning any bank account
not based at a UK branch)
(b) medical professionals
(c) landlords and property sellers
(d) internet traders
(e) plumbers and heating engineers
(f) others too numerous to mention here
and will eventually get round to using it.
For professionals this is also a difficult period and even
though you have taken proper care and attention your
acceptance of HMRC demands could lead to trouble not
only for your client but also potentially your PI policy.
Taxpayers reading this may also better understand the
need to have a tax adviser on your side when the HMRC
come a "knocking" or drop that fateful letter through the
letter box.
There has to be a suspicion from what I have seen that
they are trying to cut corners and get you to provide things
that they wouldn't normally be entitled to.
THEY SHOULD NOT BE ALLOWED!!! ..- see Bill if you
need advice or a second opinion call 07751720507
The scenario goes with the initial letter -
HMRC have information that you have had an [offshore
bank account/property/internet account] at some time in
the past. Please provide copies of all your [offshore bank
account/property/internet account] accounts held at any
time in the last 6 years"
Have you received a letter like this and what should you
do? OK don't panic it will probably be directed at one of
your clients unless you have been unwise enough to invest
outside Switzerland/ Panama /Andorra etc. or you've been
selling cars on ebay
You might of course be inclined to contact the client, get
the statements and send them off to HMRC. HOWEVER
Stop there!!! Why should you?
All the letter from HMRC says is that they hold information
and are they not being a bit naughty - read on below.
reading the text and articles unless you engage with the company and Bill Stevenson on a proper fee paying
client/tax adviser basis.
WAMS Tax Ltd - Bill Stevenson - 07751720507
client/tax adviser basis.
WAMS Tax Ltd - Bill Stevenson - 07751720507
View our details in the FreeIndex Tax Investigation directory.