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Can HMRC request bank statements of client's wife?

Client is having his 2015-16 tax return checked by HMRC, how much do I have to give them?

As part of an ongoing check by HMRC into Mr Bloggs having his 2015-16 tax return investigated, they have now asked for his wife's bank statements, do I need to provide them as she isn't being investigated or do the circumstances mean they have every right to ask for them? Just looking for opinions on if I should fight my corner and say no or provide them as they are a valid request and saying no will cause further issues as HMRC have pretty much issued a threat to us?

The background:

Mr Bloggs is having his 2015-16 tax return checked by HMRC. Self employed barber for most of the year and incorporated towards end of tax year. He had a disgruntled ex employee who was married to somebody at HMRC so this is why we think this has come up. I believe they suspect he has additional income not declared as it is a largely cash business.

We've given them all of Mr Blogg's bank statements, paypal statements, all business receipts, invoices, explanations on many of the income and expenses, and a household spending summary. Mr bloggs doesn't have the best records for the daily customers he has but deposits caash takings to his bank weekly and has receipts for cash expenses. 

Mrs Bloggs also works as a barber in the shop. She suffers from a number of mental health issues, including depression, bipolar, anxiety and is also dyslexic. I must admit HMRC have been very understanding of her condition when dealing with them for her in the past.

Because of her conditions, Mr Bloggs puts all the shop takings through his personal bank account (no seperate business account) and generally manages the shop and household money from this account. The total of the shop takings and expenses were then split between Mr and Mrs Bloggs for their tax returns. 

The full bank statements and calculations to support how amounts were split have already been provided to HMRC.

There were 4 transactions in the year from Mr Bloggs to Mrs Bloggs all around £200. 

This set up was done by the old accountant, since coming to us they went limited and it's all a bit tidier now.

HMRC asked for Mrs Bloggs bank statements because of the transactions between Mr and Mrs Bloggs. We responded saying all transactions between them are covered by bank statements already provided. They then called us and threatened us by saying if did not provide her statements they would open an investigation into her and also pass details to corporation tax to investigatethe the company. It was a threat and we said this to them to be told "that is not how we operate" and then repeated the threat. 

We haven't seen her bank statements yet.

Any helpful opinions appreciated. Thank you.

Replies

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19th Jun 2018 12:30

No, you don't have to provide her statements at the moment.

However, if they open an enquiry into her affairs, you will need to.

It's a judgment call.

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to lionofludesch
20th Jun 2018 13:49

Thanks for your comments, appreciated :)

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By DJKL
19th Jun 2018 12:34

"The total of the shop takings and expenses were then split between Mr and Mrs Bloggs for their tax returns. "

Not sure I understand, is this a partnership and was Mrs Bloggs a partner ? (Comment about splitting takings and expenses into their respective tax returns, albeit if a partnership would have expected a partnership return)

Methinks there are possibly enough indicators to signal there may be issues with her returns and HMRC say opening an enquiry into her returns would probably not be outrageous.

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to DJKL
20th Jun 2018 13:51

Agreed, I don't think them opening an enquiry into Mrs Bloggs would be outrageous at all so expect it is somewhat inevitable

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19th Jun 2018 12:48

I think it unlikely that this has anything to do with the disgruntled ex-employee. Although HMRC do act on tip-offs they would be unlikely to follow this up unless they had already flagged up issues from a benchmarking check. As your client is in a line of business that constantly falls within HMRC's radar it is likely that any anomolies would have been acted on anyway.

On the face of it it is easy to see why they would be interested in your client, and if your client genuinely has nothing to hide then your best option is to provide all the information requested. Not doing so will only cause HMRC to assume that income is being hidden and to open an enquiry, and then things get more onerous and more expensive.

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to Tim Vane
20th Jun 2018 13:55

Thanks for your comments Tim, appreciated.

Looking at past tax returns I'm somewhat surprised HMRC haven't asked questions before, it was just very coincidental timing with the leaving employee and HMRC's letters. Somewhat irrelevant why it happened I suppose now.

That would sound to be a reasonable course of action yes :)

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19th Jun 2018 20:38

1] Husband has no power to provide another person's bank statement. If HMRC want them, they must ask wife for them, assuming that the statutory processes, either TMA s9A or discovery apply to her.
2] A threat to open an enquiry into W unless something is done by H which HMRC want is improper. Refer to higher level in HMRC for comment. In similar circumstances in the past HMRC have backed down very quickly when challenged on this point.

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to Montrose
20th Jun 2018 09:50

This is the correct response. Quite simply, your client (and by extension, you) have no authority to provide the requested information.

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to SteLacca
20th Jun 2018 09:54

"The total of the shop takings and expenses were then split between Mr and Mrs Bloggs for their tax returns. "

Maybe a more pertinent question is "Who acts for Mrs Bloggs ?"

If that's you, you can only dodge the bullet by stepping into the path of another.

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to Montrose
20th Jun 2018 13:57

Thank you very much for this Montrose. I think this will be the course we follow and see what comes of it. May just delay the inevitable but worth reporting it to them nonetheless.
Thank you very much for your response.

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