HMRC can come knocking on your door
about any of the following government taxes: personal income tax and corporation tax, capital
taxes (such as capital gains tax and inheritance
tax), value added tax (VAT), excise duties
and stamp duty land tax, environmental taxes such
as Air Passenger Duty and the climate change levy, National Insurance contributions, child benefit
and some other forms of state support including the Child Trust
Fund, payments of Tax Credits and so on.
The list is
extensive, so the chance of you having a meeting
with the tax authorities at some point in your life is reasonably high. The
more money involved, the more likely it becomes.
HMRC have two main targets they work to:
·
Improving the extent to which individuals and businesses pay the tax due
and receive the credits and payments to which they are entitled;
·
Improve customers' experiences of HMRC and improve the UK business
environment
The jury is out on how well they
achieve either of these things!
So what should you expect from a visit?
In most cases they will make contact
before a visit to inform you that they are coming. This is normally by phone or
a letter explaining when they would like to come, what tax, duty or credit they
wish to look at and what records or information they require from you.
However they can turn up unannounced to
look at VAT or duty records.
Apart from special cases, the tax man will
come to look at one tax issue per visit, be it VAT or income tax. It is rare
that they will look at multiple taxes during one visit. However, if whilst looking
into a particular tax area e.g VAT they discover information about another e.g
NI, they will pass the information on to the relevant person(s).
Usually they request standard financial records such as your
year end accounts under review, along with supporting documentation such as invoices,
purchase receipts, VAT returns and bank statements. If there is a specific
issue they wish to look at, for example the value of a property, they will
outline specific things they would like to view such as a recent valuation or
the sales documents. Either way you can query the list if you are unsure about
anything on it.
The tax officer can request any
information that they feel is relevant to the area they are looking at. You can
ask them to explain the relevance if it is unclear. If you disagree the
inspector can use formal powers to obtain the information as long as they can
show that it is relevant to their investigation/ review.
If you have a disagreement with the
officer you can contact the officer’s manager – they will have contact details
on them and should provide them to you upon request.
If you are really unhappy with their
conduct you can also log a complaint.
Their skills
and resources include the full range of intrusive and covert surveillance; HMRC
officers have a wide range of powers of arrest, entry, search and detention.
Their main power is to detain anyone who has committed, or whom the officer has
reasonable grounds to suspect has committed, any offence under the Customs and
Excise Acts.
Top Tip
If you have an accountant, then ask them to
take the burden off you by dealing with HMRC on your behalf.
They are used to
dealing with the tax authorities and will know where the line is when it comes
to giving information and standing your ground. If they do find anything
adverse, your accountant will be the best person to argue your case and try and
minimise any claim they may try to raise. Oh and don’t get flustered; a lot of
people take the visits as some sort of personal attack. Sometimes the questions seem personal and
accusing but try to remember the inspector is just doing his/her job. They ask
the same questions to different people every day.
Common Mistakes to avoid
The most common mistake is people
forgetting to include/account for all of their income in their tax returns.
This could be a flat you rent out, income from cash in-hand work, employee benefits
such as a parking space in London or use of a phone or car. When you are
completing your tax returns have a good think about all of your income sources
and any employee benefits you have.
For further information/advice about
any of the above please get in touch with us on 01932 830664 (Weybridge office)
or visit www.wardwilliams.co.uk
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