Specialist Tax Advisors

Can you afford not to use a specialist tax advisor?

Last year HMRC collected £2,810,000,000 as a result of civil tax investigations. That is £2.8 billion. Most tax investigations are dealt with by individuals themselves or by the accountant who prepares the tax returns, not a specialist advisor.

Generally, people assume that HMRC will only ask for what they are entitled to and the accountants merely acts as a post box providing HMRC with what ever they ask for and trying to answer a never-ending stream of questions.

We are being approached more and more by firms of accountants to help where an investigation is going wrong and HMRC are using heavy-handed tactics and refusing to listen to logical argument.

Part of the problem is that too many people think HMRC are reasonable and that whatever they ask for must be required.  Assuming this means that HMRC control the enquiry and usually ask for lots of things that are not required which can cause many issues and then the whole investigation gets out of hand with HMRC making false conclusions and issuing information notices and penalties.

There are many reasons for this being:

• An individual’s (taxpayer or accountant) lack of experience of dealing with HMRC.
• Much reduced quality of training for HMRC staff both technical and on the job.
• Management structures in HMRC with managers supervising investigations who have no experience of tax investigation work therefore there is a lack of proper supervision.
• Significant political pressure to squeeze the tax base and get as much money in as possible.

We have seen recent cases where:

• HMRC were provided voluntarily with details about an arrangement where the taxpayer took part in the arrangement for a week and left as he did not think it felt right.  This resulted in HMRC accusing him of deliberately getting his tax affairs wrong for several years and issuing him with information notices and threats of thousand of pounds of penalties.  One letter from us and they went away.
• HMRC using an enquiry to ask about matters for other years where they were not entitled to ask any questions.  Again, one letter from us and HMRC went away.
• HMRC charging penalties and threatening to charge more (in the thousands of pounds) for not providing information.  One letter from us and not only did they agree they had all they needed but also cancelled the penalties charged.

These are just the latest examples of incompetence in enquiry work by HMRC.

Another area where we are seeing aggressive actions by HRMC is if HMRC do not get information within a very short time period they are quick to issue information notices and go for penalties for not complying with these (if the information is not provide HMRC issue information notices at a initial fine of £300 and then £60 per day (£1,800 per month)).  Most accountants agree an extension to the time scale whereas the best option is to appeal against the notice.  With an extension if the information is not provided there will be fines.  With an appeal no fines can be imposed until the matte has been to Tribunal.  As HMRC are reluctant to go to the Tribunal on information notices a reduced list of information to be provided is often agreed as a way forward. This means that matters can be focussed on key areas and also allows a specialist to get a better feel of where the true issues lie to focus on these.

The fact is that in most enquiries HMRC have little regard for their own instructions or thought to the disruption this can cause for a business.  In HMRC’s head if you are subject to a tax investigation you are guilty, and they will only look for facts that support their view.

What is most important in dealing with HMRC is keeping control of the enquiry and holding HMRC’s feet to the fire to make sure that they act within the law and follow their own instructions.  This can save time, costs and stress as it being in control is always better than having to react.

If you have issues with HMRC is it better to use a general accountant or pay a little more for a specialist?  Would you go to a GP for shoulder surgery? Specialists add value and can save both time and money.  

If you would like to know how Gilbert Tax can help with your HMRC issue, please contact us for a free initial consultation in complete confidence.