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We’ve all been there – got home from work and there’s been the horrible distinctive brown envelope from HMRC. One’s heart might skip a beat – however, generally, it is probably just a statement of account or a notice to file one’s tax returns.
However, occasionally, it is not. HMRC for whatever reason might be opening an investigation in to your personal tax return, in to the corporate tax return or perhaps in to a Stamp Duty Land Tax return.
An investigation might be purely at random or it might have been triggered by information coming to light.
In the case of the latter, traditionally, I have often been surprised at what information HMRC have not been able to join up. Some glaring holes in people’s affairs – often accidential and subsequently disclosed – but a surprise they were not picked up by HMRC all the same.
HMRC now have their hands a on a powerful data gathering computed called Connect. It is, by all accounts, very impressive and it is designed to crawl lots of previously unconnected records to ‘join the dots’.
However, there is also now lots of other information available. I am not just talking about leaks such as the Panama Papers. We now have FATCA, the Common Reporting Standard and other international reporting requirements. In that regard, the world truly has become a small place for hiding money.
However, interactions with HMRC are not just confined to people and businesses hiding money. HMRC’s powers have increased hugely over the last few years. For example, we now have Accelerated Payment Notices which, in certain circumstances, where there is a tax dispute it is a case of ‘pay now, argue later’.
Of course, the exercise of these powers must take place within certain checks and balances. We have been involved in a number of cases recently where it is alleged HMRC have ‘overstepped the mark’.
One thing we do suggest is that if you are on the receiving end of an intervention from HMRC do seek advice immediately. We have been involved in many cases where the client has started handling the enquiry themselves, dug a deeper hoe over the course of a number of letters before realising they are out of their depth. However, damage may well have been done.