client still trading. HMRC say no returns required

Client appears to have advised HMRC that they have ceased trading but this is not true.

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I have received a notification from HMRC to say that no further tax returns are required for one of my clients. Client had been very evasive recently and did not provide information for 2023 return. I suspect that he has notified HMRC that he has ceased trading. This is not true. I intend advising client to bring his affairs up to date and to correct any misinformation that he may have provided to HMRC. I doubt if he will do this and I will send him disengagement letter. Do I need to make a money laundering report or take any other action. Thank you for help.

Replies (8)

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DougScott
By Dougscott
18th Apr 2024 09:14

If it was me I'd first have a phone conversation with the client to ask why you'd received the notification as you know he is still trading and see what he says. You can also point him to your letter of engagement which should set out the consequences of not providing all relevant information including disengagement and MLR reporting requirements that you will be obliged to carry out. He may change his tune he may not.

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By Tax Dragon
18th Apr 2024 09:20

I'd avoid doing anything that might be regarded as tipping anybody off about a potential SAR.

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By leeanthonyblackshaw
18th Apr 2024 10:38

Although warning the client, in line with the protection in POCA 2002, s333D(2), can be a powerful tool in getting them to do the right thing.

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By rmillaree
18th Apr 2024 09:14

why not ask hmrc the reason for the withdrawal of the notice to file before you do anything.

are you 100% sure client is still trading and has income over 1k?

If client doesnt want to provide info for returns is it not best simply to disengage thats certainly the least hassle route?

obviously if you think they are lying to hmrc then something needs to be done but we dont know what evidence you have so we are not in a position to really comment - its easy for stuff to get lost in translation.

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By lesley.barnes
18th Apr 2024 10:30

Could it be an error at HMRC that the return isn't required? I've had a couple of letters saying clients don't need to submit a return but they are still trading and we will need to do a return.

Did he submit a return for 2022-23 or was it cancelled? I would have a word with the client first - just start by telling him you've received this letter and give him the chance to explain.

If you are certain he is still trading and it isn't just heresay and he says he isn't then I would disengage and report.

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Replying to lesley.barnes:
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By rmillaree
18th Apr 2024 12:04

Could it be an error at HMRC that the return isn't required?

quite easily or even an error of the accountant eg accounting period end date entered in cessation date box in error -easy done as they are are in the same section on the tax return.

I suspect all it would take is for someone to tell the authjorities they had ceased to claim benefits and then changed their mind and not realied that this would need correcting.

imho as per earlier post - hmrc should have the reason or some further info on their systems so quizzing them first seems to be the logical first step here - if one wants to find out.

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By Geoff56
18th Apr 2024 10:53

What happened about the 2023 tax return if your client "did not provide information for (it)"?

I wouldn't assume anything as far as HMRC is concerned. The issuing of a 'no further tax returns' letter could be an error on their part.

As far as reporting goes, again don't base it on assumptions. As others have suggested, speak to your client and HMRC first. Also, is it not the case that until a due date for (unpaid) tax has come and gone, a report could be premature?

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By garforth
25th Apr 2024 09:37

Many thanks for all the replies. Client has advised me that he no longer requires my services and that he has notified HMRC that he does not have any income. He believes this to be true as his business is not doing well. I tried to explain that he still needs to submit a tax return. I propose issuing disengagement letter and notifying HMRC that I no longer act.

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