First inspection! :(

ademoore

Hi all

I have first client under inspection, having sent all the initial documents, he is now requesting to meet the client and have all their personal bank statements! (Company had separate bank account.)
I know this is a no-no as much as possible, but how do i word it to the tax man that he will be seeing the client over my dead body, and will be dealing with me!?

Tax man stated that he has concerns over the level of income and expenses in his accounts, hence wanting to see client, however, can I just write back and ask if it is reasonably required for him to physically meet the client, as opposed to firing his questions at me, and that an agenda would be required prior to the meeting? For personal statements, I know he has no right

Help! Seriously out of comfort zone!!
Thanks!

T.C.

Firstly, he cannot insist on meeting your client. You can act as "go-between" and I strongly recommend this. You can then buffer all questions. Explain to the "tax man" that you will be attending the meeting on your client's behalf and show willing by saying that you can meet at a time suitable to them and can give them one hour of your time (more if they really want it). Then, take plenty of notes at the meeting, particular about the questions they are asking of your client. Don't answer anything at the meeting unless you are really sure of your responses. You can then politely tell the "taxman" that you will respond to his queries within the next 2/3 weeks once you have met with your client. Remember they are not 'investigating' you! Keep calm! Take notes! You will cope!

deanshepherd

You mention a company? Is it the company that is subject to an enquiry or the individual?

Seems highly improper to request personal bank statements if it is a company. I would politely decline.

I would also write back saying that a meeting would be inappropriate at this stage of proceedings and request that the inspector puts any concerns he wants addressed in writing.

I wouldn't waste my time going to see the inspector, a phone call would more than suffice when the time is right.

NeilH

Hi

Do you know who will actually be conducting the visit? A couple of years back when we had an inspection we were advised by our tax advisors that it isn't usually an inspector but clerk. The point being don't over assume their authority or let them over state it, particularly in terms of what the can and can't ask to see and what they say. However, the inspection was a routine one.

Neil

MoneySavingBank

Furhter to Neil's point.

We had an HMRC (TAX & VAT- No subject matter was given. It was an inspection of Records)visit. I had few sleepless night but you know wat?......

When they (Two old guys) came in, all they were talking about is one of our dorment company. We don't do any trading so there is no VAT to pay...

Then they advised, if you don't need this company please close it.

That's it. 5 minutes visit. it took 15 mins becuase I offered them Tea/ Coffee.

That't it.

Be positive & be confident. Good Luck!

Guest

MoneySavingBank wrote: »

Then they advised, if you don't need this company please close it.

Whats that got to do with them? HMRC cannot make you close a dormant company!

Monsoon

MoneySavingBank wrote: »

That's it. 5 minutes visit. it took 15 mins becuase I offered them Tea/ Coffee.

And that is why a meeting is not necessary - because they could have dealt with this by phone/ letter.;) Edit: wait, not sure this applies if they still wanted to inspect the records...! Although a sensible inspector would accept a company is dormant and there is therefore nothing to inspect.

It is always good to find out what specifically their 'area of risk' is, i.e. what specifically they are looking for - as sometimes it can save a wasted visit!

Rinske

Monsoon wrote: »

And that is why a meeting is not necessary - because they could have dealt with this by phone/ letter.;) Edit: wait, not sure this applies if they still wanted to inspect the records...! Although a sensible inspector would accept a company is dormant and there is therefore nothing to inspect.

It is always good to find out what specifically their 'area of risk' is, i.e. what specifically they are looking for - as sometimes it can save a wasted visit!

Maybe they just wanted a cup of tea/ coffee before moving to their next victim?

Monsoon

Rinske wrote: »

Maybe they just wanted a cup of tea/ coffee before moving to their next victim?

I was referring to the 5 minutes, not the additional for tea - tea is always good

BIG WAL

HMRC is only entitled to seek information or documents that are “reasonably required” for the purposes of checking the taxpayers tax position, although attempting to define or “reasonably required” remains a challenge. However some of the following examples would clearly be unreasonable requests and should be strongly challenged.

Asking for diaries when there is no suggestion of any deficiency in the sales record (even appointment diaries are not a record of sales but rather an intention to provide a service that may not necessarily have occurred).

If at all possible personal accounts should never be used for business purposes thus strengthening the position to challenge any request form HMRC to review personal records. Be prepared to make challenges and be robust in protecting your position.

During the course of any enquiry or record inspection it is important to also remember that whilst HMRC may have evidence to support a “reasonable request” to see personal records the identified risk must also be relevant and proportionate. Where requesting information and documents would be unduly onerous in terms of time, effort and cost and disproportionately greater than any benefit to be obtained by HMRC then consider challenging the request on the grounds of proportionality.

A refusal to supply personal records especially bank and/or credit card statements would enable HMRC to invoke its power to obtain information from third parties directly under paragraph 2 of Schedule 36.

It is important to remember though that the authorising officer will be of a senior grade and accountable for his decisions. HMRC internal guidance clearly states that authorisation should only occur if the officer carrying out the visit actually needs to authorise the power having exhausted all other means of answering the risk question. These include:

• Communicated the question usually in writing, by phone or at a meeting and been refused or encountered significant delays.
• Have a clear picture of risk.
• Considering the cost burden on the taxpayer and have evidence to show that the question is reasonable and necessary to check the true position (Therefore requesting four years personal bank statements without evidence is out of the question!).
• Confirms that the intervention plan supports the question/request.

This need to refer to a senior officer for authorisation and the review of the case should ensure that requests for personal records only occur when a clear risk has been identified by the officer carrying out the visit.

If HMRC do proceed to invoke the third party powers then a right of appeal does exist in paragraph 30 Schedule 36 FA2008.

ademoore

Thanks for all your comments every one, the case continues....!