I am dealing with an enquiry that started in November 2006. The enquiry is into 2005, and the client ceased to trade the following year.
The client is in extremely poor health.
Although nothing erronous has been found in the accounts the Inspector has looked at almost all the receipts of expenditure and is disallowing any for which the reciepts can not be found.
Once these have been added back there will be a small profit that will be covered by the personal allowance, so no tax liability.
despite this the Inspector continues to insist on seeing yet more reciepts and requesting yet more explanations.
Can anyone suggest a way in which we can get this closed on the grounds that no liability will arise, in view of the fact that this client's health is deteriorating and the stress of this prolonged situation is really not helping. I have already tried appealing to their better nature but I fear they do not have one!
Any suggestions or advice very gratefully received!!
Cathy Ratchford
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Replies (4)
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Intention To Apply To Commissioners
One tactic which can be used effectively is to write direct to the inspector indicating that you do not believe that there are any characteristics to the case that in your view, after full review of the case, justify keeping the case open.
If there are such reasons, ask the inspector for them to be laid out quite clearly and immediately in writing. Say that your intention is to apply for closure formally if no full explanations for keeping the case open are promptly given to you.
This application will most likely mean refferal upwards at inspector level, at which point you may get a fresh authoratative view on the case which will precipitate closure.
Previous years?
Don't forget if there is any adjustment then this will probably be applied to previous years as well........
Closure Application
Cathy,
A Closure Application direct to the Commissioners is probably the best course of action to take in this case.
This should force some positive action from the Inspector - even if that means that the Inspector simply looks to add back every single expense that your client has no receipt for...... but from what you have said I don't think you'll be too worried if this happens as there still won't be any liability and you will achieve your main aim of getting the case closed and hopefully not putting any further strain on your clients poor health.
You can find the contact details of the relevant Clerk to the Commissioners at the following link :-
http://www.generalcommissioners.gov.uk/ContactAClerk/county.htm
Simply write to the relevant Clerk advising which HMRC office is dealing with the case and provide the appropriate case reference etc and just advise them that you wish to make a formal Closure Application.
You'll probably be surprised how quickly the Inspector gets back in touch with you to reach agreement on the case.
Get in touch if you need any further help.
Telephone the Inspector's manager and explain your conclusions. If clearly no liability will arise regardless of add-backs it is pointless to continue the enquiry. Suggest a notional add-back so that the inspector gets some sort of adjustment, even if no tax is paid.
Failing that, ask the Commissioners to direct HMRC to issue a closure notice.