New Investigations Procedure - "The Single Compliance Process"

New Investigations Procedure - "The Single...

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HMRC have just opened an investigation into clients **2008/09** return on the grounds that he had undeclared overseas bank interest (from Cyprus).

I must admit my heart sank when I saw this, and had visions of this builder chap suddenly confessing that he had been hiding monies offshore for years. As it turns out, his mother has an apartment out there and he opened an account out there a few years ago, solely to transfer spending money into when he uses the apartment for hols etc.

Ive seen the statements, and the amount of interest involved? 1.89 euros

I realise this matter is easily dealt with, but HMRC are using this 'discovery' to open an investigation into 08/09 outside of the normal 12 months window. They are using my client to trial the new 'Single Compliance Process' whereby they are asking for an initial visit face to face. This goes against my tried and tested method of dealing with investigations, ie no meetings until they have reviewed the records and have specific questions to ask.No 'friendly' initial meetings which turn out to be anything but....

A couple of questions if I may:

(1) Is this amount of undeclared interest (in joint names with his wife), sufficient to open a full enquiry into my clients 2008/09 return?

(2) Does anyone have experience of this new compliance method? They openly state it is being 'trialled" in 12 areas for 6 months. Im not a fan of any client being used as a guinea pig, and in particular I need to know can they demand an initial face to face meeting?

Many thanks in advance

Replies (3)

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By Marion Hayes
25th Sep 2011 15:08

Agent briefing

http://www.hmrc.gov.uk/news/scp-trial.pdf 

This is all I have received from Working Together.

It indicates that the initial contact should tell you the risks that have been identified and the reason for their decisions. A meeting would indicate they think there is risky behaviour at Level 2 or above, as Level 1 would be by correspondence only. Looking backwards also indicates that they think the tax loss is more significant than the interest you quoted as they usually have a deminimis below which they do not go backwards.

Areas that come to mind that could be associated with an overseas account are gains on foregn exchange if the currency is not sterling.

I do remember someone posting a little while ago after having a new style enquiry and commenting that it was indeed more effective as the Inspector concerned was more experienced than usual. Perhaps they will post again?

I would call the Inspector and say that as the account was purely private, with no business interaction, you had not seen the statements before but your analysis shows.....

Get him to tell you why he wants the meeting and if he still asks then say you will send him an agenda for the meeting.The briefing says that they are not changing methods so limit your agenda to the areas of risk he has specified and suggest that the initial meeting is just with you, with your client at the end of a phone for back up. I have found this worked well in the past.

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By Monty Python
25th Sep 2011 15:33

No rights

There is no legal requirement to agree to a meeting.

This might upset HMRC, but the simple fact is that there is no obligation in law.

The only way they can force a meeting is by having your client arrested, which would imediately lay them open to claims for false arrest etc.  Even then Article 6 HRA gives your client the absolute right to make no comment.

HMRC are good at claiming they have powers which they dont have.

In this particular case I would send then copies of the relevent bank statements, invite them to close the investigation, and file a formal complaint if they dont.

 

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Replying to petersaxton:
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By mackthefork
25th Oct 2011 20:52

Surely there is no under declared income....

If the total is E1.89 on a joint account, the amount should be rounded down to the nearest pound which in this case is zero.

Am I missing something?

MtF

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