New Client Under HMRC Inspection

ademoore Registered Posts: 146 Dedicated contributor 🦉
I was wondering if any one might have some wise words as what to do in this situation. I doubt it's once that occurs very frequently, but may, under slightly different circumstances!

I recently (last couple of months) took on a new client, whose previous accountant unfortunately passed away (I believe he was about 90!!). When I originally spoke to this person, they said that they had tried to go back to the wife of the previous accountant, but had had no luck in getting back any of his documents relating to previous tax returns, and he hadn't kept anything himself - it was all handed over. Now I get a call from HMRC stating that there appears to be some undeclared income in his last SA (no more than about £3k) and they want explanations as to why this is so.

As I can't get to any of this historic information, and he's saying he can't either, I am unsure how to approach this, in terms of HMRC, and without just turning my back on this client! He genuinely seems a good person, and has just fallen foul this time around.

Any one have any advice on what steps to take???

Many thanks in advance.


  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
    Hi Angela

    Have you asked HMRC for a copy of his last tax return and explaned the situation? i know simple question but its seems its only through them that you can get any info
  • K H
    K H Registered Posts: 81 Regular contributor ⭐
    Under HMRC Inspection

    I have rarely found HMRC to be totally unreasonable in these circumstances.

    I would firstly call the Inspector direct , explain the situation and ask what exactly they feel has been ommitted. It is of course up to the taxpayer to keep proper records but how many do?

    If you are able to build up a rapport with the inspector and at least assure them that this was a one off you may even be able to mitigate the tax.

    Obviously what they are concerned about is whether this has happened before and if there is a need to look deeper.

    i feel to be open is the best policy because at some time in the future they will have to know that you don't have this information.

    i hope this helps, others may feel differently.

    best wishes

    K H
  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    I had a case a couple of years ago where a client was under investigation because his last 5 tax returns all had identical information. The last accountant had "done a runner" with all the paperwork. We retrieved as much information from bank statements etc, but in the end we had to agree tax owed - we had a really helpful HMRC Inspector who understood the situation, but we couldn't find information that was gone! An assessment was the only way out of this one, but HMRC were fair, apart from they did charge a penalty because my client should have checked the Tax Returns before signing them!!!!
  • ademoore
    ademoore Registered Posts: 146 Dedicated contributor 🦉

    Thanks to you all for your helpful responses!!
    I've at least managed to get hold of the majority invoices raised by the client which seem mostly in order, but I do feel the previous accountant must have prepared his SA from the vouchers paid rather than the invoices raised. Hence, if any were missing (client didnt match them up) then this would result in a lower income figure. However, not being able to get hold of the vouchers I can't confirm, but apparently the last meeting had with the accountant, he had a brain tumour and was fumbling around a lot, so he could have thumbed through two pieces of paper thinking it was one! Who knows!?
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