Case study: The HMRC tactics for unrepresented taxpayers

Buzzacott’s Tax Investigations & Dispute Resolutions team were approached by an unrepresented taxpayer (Mr A) who was subject of an HM Revenue & Customs (HMRC) Self-Assessment Compliance Check. He believed that what he had first thought was a straightforward check to confirm the accuracy of his tax return was now escalating out of control. Moreover, he had begun to feel uncomfortable dealing with HMRC.

The initial letter received by Mr A from HMRC seemed innocent enough. It invited him on receipt of the letter to telephone the HMRC officer to discuss how best they “work together to expedite the conclusion of the check”. Wishing to co-operate with the enquiry process, a call was duly made and what initially Mr A thought would be a 5-minute phone call turned out to be a 45-minute interview. Towards the end of the call, the HMRC officer had encouraged Mr A to let HMRC attend his home address to inspect business records and private financial records such as personal bank accounts. The venue of the inspection seemed strange to Mr A, given he ran his small medical profession from business premises elsewhere at which were located the statutory business records. Mr A was also asked to make available records that clearly would contain patient medical details.

Following Buzzacott’s engagement, our team contacted HMRC to discuss Mr A’s case. It became apparent that HMRC had formed the view that Mr A had achieved levels of savings over the year that was considered high when compared to the business profitability and what the ‘average model family’ spent on day-to-day living. Therefore, HMRC held the suspicion that there was suppressed takings and given this, HMRC were keen to attend Mr A’s home to witness for themselves the lifestyle Mr A and his family led.

The following outcome was achieved as a consequence of our appointment by Mr A:

• The announced visit to Mr A’s home was cancelled;
• The venue instead was agreed at Buzzacott’s offices allowing our team to immediately address any concerns or misconceptions formed by HMRC during its inspection;
• Only the business records were agreed as being reasonably required and we agreed to re-consider HMRC’s request for personal financial records should HMRC demonstrate inconsistencies with the business records and takings. HMRC was unable to do this; and
• Only certain parts of the patient's medical records were shown to HMRC given they contained personal and confidential information.

By working with HMRC we were quickly able to satisfy the concerns they initially held which led to the enquiry being opened and fast-tracked the conclusion of the Compliance Check. Mr A felt relieved in being able to continue his business knowing that we were acting on his behalf and was grateful for our involvement. 

This case highlights how HMRC’s pre-selection risks are not always correct and how HMRC may decide a course of action that best serves HMRC rather than the taxpayer, or one that is genuinely ‘reasonably required’ or could be undertaken by another method or course of action. This case also demonstrates how HMRC behave differently when a taxpayer is represented.

If you are the subject of an HMRC Compliance Check do not hesitate to contact us. Our team provide a discreet and comprehensive service that is tailored to meet your unique needs and protect your interests.