Minimising the risk of enquiry. By Kevin Igoe
There has been much talk since the budget of HMRC's stated intention to reduce the number of enquiries. But there is no indication that HMRC intends to reduce the targets for collecting extra tax. Indeed, HMRC is still expected to collect more overall.
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Just say NO
There is no reason to give anything relating solely to the wife. The payments being made are not being claimed as tax deductible, and therefore it should be argued that they do not form part of the tax return, which in general is the criterion for requesting books and records. Will the inspector also ask for the statements of all the suppliers your client has?
Insist that the Inspector issues a separate enquiry notice on the wife's return if he wants to see ANY information that is personal to her.
unidentified bankings into a personal bank account
I came a cross a case afew years ago where Revenue wanted to charge as additional income some unidentified bankings that had been made into a self-employed's personal bank account.
However Commissioners held that the Inspector could not assume that these bankings were income and therefore rejected the argument.
Has anyone else come accross this case as I cannot remember the name or details?
Inland Revenue Enquiry
We have a soletrader client under enquiry. All the business records such as the business bank statements, sales invoices, etc have been provided to the Inspector. Shown on the bank statements are a number of transfers of money into to his wife's private bank account. The money is for housekeeping. The Inspector has requested sight of the wife's bank statements with a view to identifying all deposits made in that year - she has not recieved an enquiry notice.
I have reviewed the Inland Revenue manuals and there is no guidance to such a request. Has anyone come across this before and do we have to provide this information?