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Horror story that could happen to anyone.

We've recently had a real horror story brought to our attention. Briefly the facts are -

  1. Agent prepares and submits accounts/return for sub-contractor.
  2. Few weeks later HMRC pay refund into agents bank.
  3. 3 days later agent deducts £280 fee for accounts and transfers balance into clients bank account.
  4. A few months later client alleges he never received refund and threatens agent.
  5. Agents bank statements clearly show monies in and out and all bank details are correct - client refuses to allow examination of his bank statements but bank confirms transfer did go into his account.
  6. Client then arrives at agents home and threatens agent with physical violence and police called to remove him.
  7. Client then rings HMRC and repeats allegations to them.
  8. After becoming aware of this the agent writes to HMRC even enclosing copies of his bank statements proving payment made.
  9. Despite this absolute proof HMRC then "pull" all the agents clients, freeze all refunds, and start writing direct to agents clients.
  10. Effectively agent put out of business by malicious false accusations of one demonstrably deranged client.

The agent quite rightly is seeking damages and compensation from HMRC for unlawful restraint of trade, and, wants the client arrested for his attempted extortion.

Personally whilst the client is clearly an idiot, the behaviour of HMRC in this is unforgivable.

I'm currently formulating claims for the agent to file against both HMRC and the (ex) client.

Has anyone experienced or come across anything like this before ?

Replies

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03rd Oct 2011 13:23

Must be more

There must be more to this story.  The Christopher Lunn case earlier this year was exceptional and gained a lof of publicity and the grounds for HMRC terminating the agent relationship were clearly much stronger than in the case you outline above.

HMRC internal guidance states that refusal to deal with an agent entirely should happen only when there are the most exceptional and extreme circumstances, since it can put the Revenue in a position in which human rights or data protection legislation is breached.  Therefore if would seem hard to believe that HMRC followed their own guidance in the circumstances you outline.

Given the circumstances and the highly controversial nature of the Lunn case, I find it almost impossible to believe that there aren't further facts behind the case than what you present - if it were accurate as presented, it would be more significant than Lunn and draw a lot of focus on HMRC & agent dealings - at a time when the agent consultation is ongoing.

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04th Oct 2011 10:51

Likewise

This is not in the least HMRC's method of working, so it could be one huge cockup, or it could be an urban myth type story.

Virtual Tax Support for accountants: www.rossmartin.co.uk

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By BKD
03rd Oct 2011 20:03

Likewise +1

Nichola Ross Martin wrote:

This is not in the least HMRC's method of working, so it could be one huge cockup, or it could be an urban myth type story.

Personally, I'd go for the latter

The question was "Has anyone experienced or come across anything like this before?" Well, with almost 1,600 reads and not a single positive response, I'm guessing the answer is a resounding "no".

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03rd Oct 2011 14:54

Likewise +2

BKD wrote:

Nichola Ross Martin wrote:

This is not in the least HMRC's method of working, so it could be one huge cockup, or it could be an urban myth type story.

Personally, I'd go for the latter

Me too...

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I hope not the norm

I am sure that Owain would not have taken the case if there were not a preponderance of evidence that these events have happened so calling it a myth is unfair!!

This sounds to me as if it is far more selective than a general refusal to interact but someones idea of the best way to stop any other refunds going astray - is that what you meant to imply? Whilst they should not have taken any action involving clients they should have asked for the 'crime' to be investigated before publicising the allegations.

In my experience any allegation of a repayment going into the wrong hands is investigated by the police and the results followed on from their findings. I haven't seen the agent being accused before but certainly have seen family members and friends fall foul of a taxpayers failure to think things through properly.

Marion

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By BKD
03rd Oct 2011 22:29

Is there a case to answer, though?

Marion Hayes wrote:

I am sure that Owain would not have taken the case if there were not a preponderance of evidence that these events have happened so calling it a myth is unfair!!

Marion, you are assuming that the events outlined in the opening post did in fact occur, and that there is in fact a case being prepared. I'm not saying that is not the case but, as others have pointed out, something does not quite gel.

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04th Oct 2011 07:31

Extremely significant

 

thisistibi PM | Mon, 03/10/2011 - 13:23 | Permalink

....... it would be more significant than Lunn and draw a lot of focus on HMRC & agent dealings - at a time when the agent consultation is ongoing.

As thisistibi says ... this case is extremely significant to ALL agents, and as Owain says .. it could happen to anyone.

I cannot understand why there hasn't been a lot of publicity, as in the Christopher Lunn case.

Agents everywhere will be very concerned, and very worried, reading this and it could put the final nail in the coffin to any hope of HMRC being able to monitor agents in the strategy proposed by HMRC.

C'mon John. This should be headline news, so maybe Aweb will do a News Article? We need more information.

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By BKD
04th Oct 2011 07:57

Too soon?

ShirleyM wrote:

C'mon John. This should be headline news, so maybe Aweb will do a News Article? We need more information.

Shirley - until a case is taken to Court, I don't think it would be appropriate for AWeb to publish any information on it and even then, they'd need to be careful.

Further, if it is indeed the case that papers are being prepared for a case, I'm not sure that the Court would be too impressed to find out that prosecuting Counsel had been openly discussing the matter on a public forum such as this. Whether or not it would amount to contempt of Court, I really don't know, but at the very least the behaviour does appear to me to be less than professional.

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04th Oct 2011 08:21

Re BKD's post

I hardly think the OP is "prosecuting".

As for "discussing" on a public forum, it is quite normal for counsel / the solicitor for either side to give statements to the press before a case is heard.

The suggestion that it may be "contempt of court" is, of course, totally wrong, and the closing suggestion the "the behaviour appears less than professional" is itself unprofessional.

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BKD

Compressing information can always lead to it being read in differing ways as is demonstrated by the difference between my interpretation and Tibi's.

I fail to see where contempt of court comes in as there is, as yet, no case. Information gathering  is necessary to establish things such as pattern and this would appear to a valid way to contact a large number of professionals. I would asume that as we are all bound by confidentiality the replies would merely be an indicator to Owain as to how to proceed.

You are right to be cautious on publishing an article on a potential case but perhaps an article on what to do if clients repayments do go astray explaining current HMRC procedures would be useful, or on how to respond if we do get disengaged by HMRC.   

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By BKD
04th Oct 2011 09:23

Marion

Marion Hayes wrote:

I fail to see where contempt of court comes in as there is, as yet, no case.    

Thank you, Marion. I am no legal expert - as you can tell. Which is why that I said I didn't know if contempt of court was in point. Thank you for putting me straight.

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04th Oct 2011 10:24

Different interpretations

Marion Hayes wrote:

Compressing information can always lead to it being read in differing ways as is demonstrated by the difference between my interpretation and Tibi's.

I'm not sure we had particularly different interpretations.  Perhaps you could expand on that?

Marion Hayes wrote:

This sounds to me as if it is far more selective than a general refusal to interact

When OP writes "HMRC then 'pull' all the agents clients, freeze all refunds, and start writing direct to agents clients", it constitutes a general refusal to act in my books!

 

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Hi both

Thanks for replying so quickly

BKD - I am not a legal expert either but I do think you need to be already in court for that to apply.

Tibi - I read it to mean they had pulled a list of his clients, identified potential repayments and then written for alternative instructions as opposed to writing to all his clients. Again - not more than an interpretation so perhaps Owain would clarify

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