A client has had a call from a HMRC 'SME Hidden Economy' person who wants to do a visit. The client has asked me to attend too.
This is a new experience for me. Do you have any pointers that I should bear in mind? Is this a general visit which will encompass all taxes? They are going to send a confirmation of what records need to be made available, but I expect that to be broad.
Thanks in advance.
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Hidden Economy
The assumption will be that the client is guilty of wrong-doing! You need to be clear whether you will declare undeclared activity (if applicable), or insisting that declarations are correct. And, yes, do expect it will cover all relevant taxes.
Background reading
You might also want to look at the following links
http://www.hmrc.gov.uk/manuals/cogmanual/cog904582.htm
https://www.gov.uk/government/publications/hidden-economy-understanding-...
https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...
Will be nothing routine about the visit.
They will time up pre armed with info that they think your client is guilty of.
You need a serious chat with your client to sound him out for what the issue could be.
Has he had any disgruntled staff leaving or ex wife type of situation who could wrote causing trouble.
Does he pay cash wages out or do cash jobs etc.
One of my clients had a visit from the hidden economy team a couple of years ago. He'd gone over the VAT threshold and hadn't registered, not sure if they knew it beforehand or whether it was just likely from his trade sector. The HMRC officers were fairly low-ranking and not particularly knowledgeable about things in general but sufficient to identify the VAT issue and subsequently agreed a reasonable arrangement regarding VAT registration and penalties.
You need to consider all areas of tax as their checklist covered them all.
Hi, can you give me any more brief details on how you handled this if you have time? Thanks.
That's usually the way. They are hardly like to tell you what they are hiding from HMRC, since any agent worth his salt with either insist it's declared or walk away.
During your talk, you also need to advise your client about the likely consequences (penalty for a prompted, deliberate and concealed activity can be as much as 100% of tax found to be due).
Is it the company or the individual that is trading?
Presumably the client is an Ebay/Amazon type seller. Check that all online sites clearly indicate that it is the company that is selling the goods. HMRC have possibly picked up the registered name of the online business, which may well be the individual's personal name. You will need to convince HMRC that the individual is not trading on a personal basis.