Private Bank Statements for Tax Enquiry

System

I have a new client who is undergoing a tax enquiry. They have asked to see his private bank statements, but these are for a joint account held with his wife and she does not want to release them. Does my client have to disclose them? Anybody?

System

Re:Private Bank Statements for Tax Enquiry

I assume that the investigation has established that the accounts are not based on a robust and effectively operated record keeping system.
In this instance the Inspector may be justified in calling for private bank statements especially if he has concerns over perhaps the completeness of business records,or capital introuced into the business or concerns that maybe income or gains from the business have beeen credited to the private account.
In order to allay these concerns the Inspector may issue a section 19A notice compelling the tax payer to produce the listed documents contained within that notice. Failure to produce within 30 days is usually penalised with a financial sanction.

Usually the Inspector will have sound reasons for requesting the private bank statements and a lack of cooperation by your client may count against him when the question of penalties , if any, at the end of the investigation is addressed.

I assume the client has nothing to hide and should therefore cooperate with the Inspector's request.

You would be advised to review the statements with your client so that you can ascertain the source of unidentified credits into the account before releasing them to the tax Office.

You will then be well placed to field any queries from the Inspector concerned.

I would talk to the wife and try and explain why the statements are needed. If everything is as it should be she should have nothing to worry about.

System

Re:Private Bank Statements for Tax Enquiry

Just to follow on from IanB reply. I have a client currently undergoing a tax enquiry. The inspector has requested private bank statements which the client had lost. His bank have taken forever in getting the copy bank statements and the Inspector has issued a S19a request DEMANDING the bank statements within thirty days.

If your client does not co-operate HMRC will become suspicious and this will only prolong the investigation unnecessarily. If there are any dodgy figures when the bank statements arrive it is usually worth being open and frank with the Inspector as interest charges can be discounted on the basis of full co-operation though this is usually at the Inspector's discretion.

Kind regards
Steve