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Revenue request for accountants link papers.

I have received a Revenue enquiry into a General Store.
The case is small and amongst a host of other requests in his opening letter, the Inspector has asked for our link papers, including trial balance, journals/adjustments, with narratives etc.
Do other practitioners have evidence of an increase in the number of such requests being made as a matter of course?
I intend to provide as much detail as can be easily collated, but will stop short of the actual link papers.
Has anyone else gone down this route? I assume it did not lead to the issue of a S20 notice.
John Dunney


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27th Jun 2003 12:44

Provision of working papers
I think it is reasonable for the IR to request information on how the figures in the accounts are derived from the figures in the tax payer's prime books or how the figures in the return are derived from the accounts, where this is not self evident from either the books or tax return. They could not do their job if they did not have this information.

If you have had to prepare the accounts from scratch (ie: carrier bag job) then it is not unreasonable of the IR to expect to see the cashbooks, ledger printouts, etc used to prepare the accounts to validate the transactions making up the balances.

Beyond that, in an enquiry I will only respond to specific questions of fact. If this is best done by providing a list of adjusting journals, produced from an accounts production system, or by explanation is a matter of what is easiest and quickest. If it is easily answered by photocopying a specific page from the file then so be it.

Under no circumstances would I provide the working paper file.

Arthur Anderson eat your heart out. Is it true they still have an office in Chicago and that two employees turn up for work each day?

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20th Jun 2003 17:30

Don't help
Basically tell the Inspector where to go.

Just give him access to the records. I would not send these to the tax office, but make them available to him, this is all that is required at the moment. If he asks for additional information that does not concern the Tax Return then politely refuse.

Do not as a matter of ordinary practice subject your client to an interview. Do not refuse, just say "at this stage in the enquiry we do not feel, etc"

This tends to put them at a bit of a disadvantage which can only help you. The last time that I did this the Inspector had no where to go, and after a bit of threatening about commissioners quietly dropped the case and issued a clearance notice.

This assumes that your client has assured you that everything is OK. If he confesses his sins go in with you hands up waving a white flag.

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By Abacjm
20th Jun 2003 01:52

Link Papers
I think this is just one of the archaic ways that the Revenue still deal with enquiries.
In th good old days when getting your extended T/B and Balance Sheet to balance was considered to be a good time to sit aback and have a well deserved coffee break, you probably would have link papers, with adjustments. Accruals/prepayments etc.

Nowadays with the development of accounting software being so mainstream and editable, I doubt if very many accountants actually prepare any link papers apart from adjusting the T/B in the Accounts suite and entering accruals/prepays which auto reverse on period update, before transferring the figures on to the Tax Return.
Still, though, the Revenue continue to ask and you can just tell them the truth - there are none!

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By gbms
20th Jun 2003 14:46

Tax Bulletin 65
The latest Tax Bulletin has an article about asking for accountant's link papers:

Tax Bulletin 65

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