Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

<b>Any Answers:</b> Revenue enquiry heating up. By Rebecca Benneyworth

by
10th Mar 2006
Save content
Have you found this content useful? Use the button above to save it to your profile.

Member Trevor Scott has been very thorough in his replies to an Any Answers query regarding an enquiry which seems to be spiralling out of control.

The enquiry has been running for 12 months now, and clearly the practitioner has suspicions that the Inspector involved is now trying to bully the client. The Inspector has had access to company accounting records twice already, and has been able to take copies, including electronic copies, which he has retained. The Inspector has also made repeated requests for the directors' private bank statements, which is not too unusual in the case of a close company enquiry. The response has been refusal, but the provision of some personal financial information relating to the directors as a gesture of goodwill and co-operation.

After 12 months the practitioner has lost patience with the slow replies by HMRC, and has applied for a closure notice to bring the enquiry to an end. The Inspector's response to this is to threaten to issue a Section 20A notice requiring production of the directors' private bank statements.

Can this be permitted, asks the questioner? How should I now proceed? A wide range of answers offered a variety of views about tactics, and correctly stated that the Inspector is not precluded from taking further action in spite of an application for a closure notice, but member GB rightly pointed out that the Inspector has not actually issued a notice under Section 20 TMA 1970, but has just said that he intends to. Sometimes this technique is used to prompt a dilatory adviser to respond, and some Inspectors use such a threat as a gesture of desperation. However, that would not seem to be the case in this enquiry, with the advisers responding promptly and as fully as they consider appropriate to every request for information. What are the Inspector's motives in such a threat, and does he consider that the Commissioners would support him, in view of the application to close?

As has been indicated, the Commissioners frequently cut the tax authority plenty of slack in allowing information that the Inspector states is necessary to complete the enquiry, but as GB has highlighted, the Commissioners can be persuaded to limit the Inspector's access to extraneous documents in some cases. The trouble is, that Section 20(3) allows the Inspector to call for documents which in his reasonable opinion (my emphasis) may contain information relevant to the taxpayer company's tax liability. As indicated, the inspector will need to justify his request to the Commissioners, and the adviser will have a job on his hands. The Commissioners will grant a request if they consider that the Inspector is justified in his action.

A difficult position to be in. Could the practitioner ask for the case to be reviewed by a senior officer? ( I have had to retype 'Inspector' with 'officer' so many times!) It might just turn the temperature down on this case. The chance that the application for a closure notice will make things worse does not seem to be a real concern, as things seem to have progressed beyond that stage.

All in all, a fascinating case, but one suspects that aspects of this are not too unfamiliar to members long in practice!

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.