Inland Revenue Enquiry

Inland Revenue Enquiry

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We have a soletrader client who is under enquiry with the Inland Revenue. We have provided all accoutning records such as business bank statements, sales invoices etc. Shown on our client's bank statements were a number of transfers out of the business bank account into his wife's personal bank account, the transfers are for housekeeping. The Inspector requested copies of the wife's personal bank statements, but we did not provide them instead we asked for an explanation as to why the Inspector would wish to see them. The Inspector replied that it is not unusual for such a request and states that he wants to make sure every deposit into the wife's personal bank account can be explained. We are really concerned by this request as our client's wife is not under enquiry, it is not a partnership. Has anyone ever come across this before?
Lorraine Hickson

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By User deleted
13th Apr 2006 23:53

Yes!
Yes I have had such a request and politely told the Inspector they would not be supplied as the wifes affairs were not under Enquiry.

Sadly some eager Inspectors do try it on!

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By User deleted
14th Apr 2006 11:23

Resistance may be futile.
I am currently working through an enquiry on the same basis. The inspector made a formal request to my client’s wife and she refused the request. A trip to the commissioners was bandied about but instead the inspector has simply opened an enquiry into the wife’s affairs thereby getting the info he wanted anyway.
The inspector is taking the attitude if there is nothing to hide why the secrecy and my client is jumping up and down and screeching about big brother tactics.
If the Revenue are likely to regularly respond in this manner then you begin to wonder at the prudence of refusal.

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By AnonymousUser
16th Apr 2006 09:14

yes and no
This is a long standing issue arising from the introduction of indpendent taxation many years ago. The Revenue manuals (now HMRC manuals) are fairly clear on the public policy, if not the desired approach of some Inspectors.

They are not entitled to obtain the wife's bank account through an enquiry into the husband's affairs. They can issue a section 20 notice. They have to prove to the commissioners (the Tribunal) that there is a valid reason. They can open an enquiry into the wife's affairs and then ask for any information that they may reasonably require. I have no qualms about telling HMRC to do that very thing. At least then information is being given in accordance with the rules. I would, however, check that they are within the time limits for opening an enquiry.

Finally, to the question, if there is nothing to hide why not comply I answer, if there is no right to require the information, why provide it.

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By lorraine.hickson.bennettb
19th Apr 2006 14:17

Thanks for your replies -
I will tell the Inspector 'NO'!! I will of course let you know if he pursues it.

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By ugdiv
14th Apr 2006 09:58

Look at previous posts

The data protection act prevents you from supplying the info.

Richard.

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