Surprise visit from HMRC!

Surprise visit from HMRC!

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Just had a phone call from a client that runs a public house, to find out that he's had VAT and tax inspectors visit him today. They didn't contact him before hand to arrange an appointment. They simply arrived unannounced and demanded to see the paperwork and discuss the running of the business. I've never come across this before, but according to the lovely new gov.uk website, VAT inspections can take place without any prior notice.

We're not worried as we know he runs his business well and efficiently. But HMRC are clearly using underhand tactics to catch people off guard and panic them into making mistakes. Do you agree that this is totally unethical and acceptable?

Surely he would've been well within his rights to refuse to deal with them, under the grounds that he didn't have time as he had no prior notice, and that some paperwork may not be kept on site.

Replies (24)

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By User deleted
19th Nov 2014 16:30

totally unethical?

That has nothing to do with tax laws and their enforcement!

HMRC are well within their rights (read para 10 on) to make unannounced visits (within reasonable working hours) and they do visit and take away all the receipts and documents as well! 

However, you can object if there is a breach of privacy.

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Chris M
By mr. mischief
20th Nov 2014 06:45

it's happened to clients of mine

Regardless of whether or not it is legal, in my view unless there is suspected evasion or fraud it is completely unprofessional, like much of the way HMRC operates these days.

My advice to the client was:

1.  Say as little as possible until I got there.

2.  Ensure HMRC were not told where the records were - they were off site other than the last week or two's transactions.

3.  Make no agreements to pay anything.

In my case, they turned up at lunchtime and announced the visit in front of all the regulars who were in the public bar.  Disgusting beyond belief.

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By andrew.hyde
20th Nov 2014 10:27

Proportionate

The key to any enforcement action is that it should be reasonable in proportion to the  (suspected or actual) behaviour that is the trigger for the action.

If you were investigating a possible crime of receiving stolen goods, an unannounced visit to a private residence might well be proportionate.  Arranging a time in advance would probably compromise the investigation somewhat.

If the trigger for the action was (say) a doubtful capital allowances claim that required a physical inspection of the items involved, then most people would judge it reasonable to agree a convenient time to visit premises in advance.

We perhaps don't know enough about the OP's case to make a judgement.

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By refs8
20th Nov 2014 12:08

I would not be happy either

If HMRC did this to one of my clients, I would not be happy unless that client had done something seriously wrong. Fraud or a crime, in which case I would cease to act immediately anyway or long before. If this was a routine visit then I would complain to the highest level if necessary

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By DMGbus
20th Nov 2014 13:40

Black economy team / shadow economy team

My experience with one of my clients some years ago was that if the BlackEconomy Team / Shadow Economy Team people are involved then they seem to consider themselves to be an elite outfit within HMRC and not governed by any established fair, established, conventional or ethical practice.

As their brief was to identify unregistered businesses it was quite acceptable for them to visit my client (or any business) and ask if they were registered for VAT / tax - which my client was - problem was that (like most small buisinesses I expect) my client did not comply with the business names / ownership disclosure laws so HMRC could not easily see that the shop concerned was a branch trading under a specific trading name and all properly accounting for VAT / PAYE.

PS. In any event the individuals entering the client premises claiming to be from HMRC should be carrying proof of identity as HMRC officials, which I would hope were checked out.  

If there was compliance with the business name / ownership regulations (ie. notice on the wall of all premises stating the legal owner of the business) then a finger directing the HMRC officers to that notice should suffice along with a comment "now you have information as to the ownership of the business and I have told you that a PAYE scheme and VAT registration is in place under that owner's name please could you kindly leave the premises and put any further enquiries in writing to my accountant".

 

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Replying to kevinringer:
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By User deleted
20th Nov 2014 14:47

Really?

DMGbus wrote:

BlackEconomy Team

Would they be allowed to use that designation anymore? Shadow is much more PC... 

 

And, as far as 'elite' goes...

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By Lee11_1989
21st Nov 2014 11:06

Got Some Advice

So I was at a seminar yesterday and decided to run this by some legal specialists who were running it.

They confirmed that a VAT inspector can turn up unannounced at any reasonable time, but a general tax inspector can't. This is why they go together, as it gives the tax inspector a way in. However, you are only obliged to provide the VAT inspector with any paperwork that is kept on site. You are not obliged to answer any questions unless they arrange an appointment in advance. Simply provide any paperwork, let them look at it, and tell them to leave.

You have the right to refuse the general tax inspector entry to your premises, even if he is with a VAT inspector. I was told yesterday that you can tell him to go and wait in the car, while you deal with the VAT inspector.

It turns out that the inspectors that visited our client wanted to look into the paperwork and ask how the business was run. For example, recording standard rate and zero rated sales separately, and are the tills balanced with the Z-reading at the end of every day etc... Although he complied and answered their questions, he was under no obligation to do so.

It might just be me, but I would love the opportunity to tell a tax inspector to go wait in the car while I talked to his partner. :)

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Replying to JCresswellTax:
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By ATS_ACCA
21st Nov 2014 12:46

Inspection

 

I quote " They confirmed that a VAT inspector can turn up unannounced at any reasonable time, but a general tax inspector can't".

Just I'm wondering; is this statement stipulated or endorsed by any Regulation?

Any help or advice will be highly appreciated.

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By Lee11_1989
21st Nov 2014 12:12

Tax Inspection

New update.

We just received a letter today informing us of a self assessment tax inspection for our client. The letter is dated 19th November 2014, the same day that they turned up at his pub unannounced. Coincidence?

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By Lee11_1989
21st Nov 2014 14:33

Legislation

I haven't managed to find any legislation regarding the powers of a general tax inspector. However, the link below explains the power of a VAT inspector being able to demand paperwork at any reasonable time.

www.legislation.gov.uk/ukpga/1994/23/schedule/11

Paragraph 7. Sub-paragraph 2.

 

The information I was provided with yesterday came from a former HMRC inspector, who turned to the good side and started fighting against them.

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By Susan Frank
21st Nov 2014 15:03

the good old days...................(NOT)

 When i left  HMRC ( over 10 years ago )   VAT inspectors could and would turn up at a company on spec - they were and are entitled  to do so by Law.. At the time Tax inspectors couldn't - unless by prior agreement. There were steps taking place   to align the two sets of enforcement rules  - at the time Revenue and Customs had just been merged and to be honest us in HMIT  wanted the ability to be able to walk in as the VAT inspectors did! ( sorry it was my job as an enquiry officer ) - we were frantically trying to get joint working of cases - ideally to go in and do everything at once i.e. Tax ( whether it was  SA or CT) , VAT & employer compliance.

The majority of VAT inspections were just that  to ensure proper paperwork was correctly being held.  I suspect by now the legislation may have changed to allow joint working of a case . In which case the visit may well have been a joint working case.

 

 

 

 

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By vinylnobbynobbs
21st Nov 2014 16:15

The Good Old Days (Not) Part 2

When the Department of Social Security National Insurance sections merged into HM Inspector of Taxes, DSS former inspectors had warrants which enabled them to enter any premises whereas HMIT did not.  The ex DSS people were always the more difficult to deal with, were very aggressive and laughably did not actual grasp taxation.

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Chris M
By mr. mischief
21st Nov 2014 17:06

I am fine with it, after all there are some genuine tax evaders and dodgers out there and in my view surprise visits - just like Ofstead visits and similar - are essential to prevent preparation being done.

It's the way they go about it sometimes.  No way was my pub client anything other than a decent bloke being trampled underfoot by the brewery.  There is just no need to march into the middle of the bar and announce the tax inspection to everyone having a drink or meal there.

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Replying to mr. mischief:
By SteveHa
13th Apr 2018 10:49

Would that non constitute a breach of the Official Secrets Act.

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By Susan Frank
21st Nov 2014 17:07

the good old days..(Not) part 3 - actually it was good fun...

Tax Inspectors also had warrants   - just not the powers ( at the time) to visit a business on spec. HMIT had very few powers in those days - even the power to walk past    an individuals  house to see how many Merc's and Ferraris  were sat on the drive (believe me there were a few)  - although to be honest i was never sure why - info like that did seem quite important at the time - obviously i do not hold those views now......

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Replying to leshoward:
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By GuestXXX
17th Mar 2015 17:32

.

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By airgeadagam
22nd Nov 2014 00:58

Surprise Visits

I hate surprise visits: they only ever happen when we've run out of biscuits.

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By LuKosro
22nd Nov 2014 22:40

Human Rights Act

http://www.hmrc.gov.uk/manuals/chmanual/CH300900.htm

"When we are considering penalties you have the right under Article 6 to not answer our questions. This is sometimes referred to as the right not to self incriminate or the right to silence. This right does not cover information or documents that already exist. This means that you must provide us with such information or documents that already exist, if we have a legal right to request them."

 

The UK / EU equivalent of Miranda Rights :)

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By andrew.hyde
24th Nov 2014 09:07

'Tax Inspector' vs 'VAT Inspector'

Actually the distinction is archaic.  The Commissioners for Revenue and Customs Act 2005 - see Sections 2,  6 and 7 - creates a creature called 'an officer of Revenue and Customs'. This person inherits all the powers of the two predecessor departments.

That is not to say that there is no distinction. However that distinction is functional rather than personal. Any HMRC officer may have VAT powers at his or her disposal, but only when dealing with VAT matters.

This is of course a necessary simplification.  If you want to un-simplify the matter a bit, you must read CRCA for yourself!

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By armstrm
24th Nov 2014 11:37

Since when..

does HMRC act in an ethical or moral manner? They want tax payers to consider ethics and morals, but HMRC only consider one thing. Whether something is legal, or whether they can get away with justifying it as legal, or push their luck to do things they are not allowed to do by relying on ignorance of the tax payer.

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7om
By Tom 7000
24th Nov 2014 11:56

Thats nothing...

There are some officers that can just turn up and arrest you. No warning all that happens is you find yourself in a police station and you have to call your lawyer not your accountant.

 

But then if you havent done anything wrong...you havent got anything to worry about have you?

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By robertcl
24th Nov 2014 12:06

Cash businesses tend to always be more under the loupe of the HMRC than others. Having worked in a few other countries in the past, I'm quite surprised that they don't do more surprise visits at minicab offices and drivers, off-licenses, cleaning businesses and the like.

Not that endorse it, but it's just what tax inspectors elsewhere tend to put more emphasis on.

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By billgilcom
28th Nov 2016 16:25

Ah the good old days ..... Being one of the past creatures that could arrest somebody and also an HM Inspector in a past life who held a warrant card I can say that since 2005 there has been no difference in the powers of either the indirect tax VAT Officer or the direct tax "Officer" in that boths powers are contained in FA 2008 Schedule 36. So maybe some VAT officers have conveniently forgotten that they lost their powers of prancing all round a businesses premises at their will and they have no more power than the General Inspector.
Yes unannounced visits are becoming more frequent but before even entertaining people who turn up announces there are a few basics to be taken care of inter alia
(a) ensure that they have their personal ID with them (and there is no reason why you shouldn't ask to copy it)
(b) ensure that they are visiting backed up by the appropriate authority (either an authorisation signed by an authorised officer of HMR&C allowing them to call uninvited or unannounced or the appropriate authority from the FT Tribunal)
(c) that the date of the visit is within the stipulated dates shown on the authority
(d) they provide a copy of the Authority before they start any Inspection

then realise that the authority only allows them to inspect the premises and records and NOBODY is obliged to even talk to them.

Schedule 36 also only gives them the power to enter and INSPECT either the premises or assets or documents OF THE BUSINESS it does not allow them unfettered access and they cannot go on a search of the premises. Nor does it allow them to enter premises used as a dwelling house.

Of course there is nothing to stop the client telling them that he/she is willing to cooperate but any discussion of any sort will have to await the arrival of his/her tax adviser that he/she is just phoning now. Then of course if you have any doubts or difficulties you can always phone me on 07751720507 for a short chat if you would want to involve me
Bill S
www.wamstaxltd.com

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By billgilcom
28th Nov 2016 16:27

I just hope that they handed him the "authority to inspect" before doing anything otherwise they were not acting properly.

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