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HMRC Compliance check

Client has been asked to show personal bank statements

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Hi 

HMRC has opened a compliance check against a clients self-assessment tax return (tax year ending 5th April 2016). This was due to multiple directorships and only one source of income which was a salary from one of the limited companies. The clients' receipts from the company match the amounts declared on the self-assessment tax return. Everything else matches what was declared. 

However, HMRC now wants to actually see the salary payments into his personal bank account. Is this normal? The client understandably doesn't want to print off 12 months worth of bank statements for an account that he shares with his wife and runs his household through (its a lot of paper).  If it is normal, can he just print off the pages with the payments on so there are only 12 pages instead of close to 80? 

Its the first Compliance Check I have had to deal with so not sure what HMRC's boundaries are. 

Thanks in advance. 

Replies (14)

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RLI
By lionofludesch
09th May 2018 16:53

No, it's not normal, it's excuse for fishing.

If they want to see the salary going into the account, send them a copy of the statement with all the figures masked out except for that single salary entry.

What's wrong with the RTI ? There's where your evidence of salary payment lies.

Thanks (1)
By SteLacca
09th May 2018 16:42

I'd go one further, not send them and ask what legal basis they are requesting them on.

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Replying to SteLacca:
RLI
By lionofludesch
09th May 2018 16:52

Yeah, I'd probably end up doing that, to be fair, but I'd pay good money to see their faces when they opened the envelope of redacted statements.

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By Vaughan Blake1
09th May 2018 16:54

Not untypical I am afraid. However, resist and ask them why and what it proves. HMRC will be looking not at the known bankings, but at the other bankings and you will have endless arguments justifying that they are not undeclared income.

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By Red Leader
09th May 2018 16:56

I think I've had something similar, though it didn't get to the stage of personal bank statements being requested. The root cause was payroll processing confusion. Check whether the employer had a change in PAYE ref. Sometimes it looks like two employments to HMRC when it's really just an internal reorg.

All that said, cast a forensic eye over the P60 and perhaps speak to those responsible for the payroll/s.

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By ireallyshouldknowthisbut
09th May 2018 17:48

The key to this is to understand why HMRC are asking.

If you can work that out, then you can provide the right data to satisfy the question.

I find talking to them is good.

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By exceljockey
10th May 2018 07:57

In 8 years of dealing with HMRC I have not had much to complain about but this is getting a little tedious.

The compliance officer is now looking for the ‘invoices that created the salary payments’ - either this is a trick question or the officer isn’t 100% certain how payroll works.

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Replying to exceljockey:
RLI
By lionofludesch
10th May 2018 09:19

exceljockey wrote:

In 8 years of dealing with HMRC I have not had much to complain about but this is getting a little tedious.

The compliance officer is now looking for the ‘invoices that created the salary payments’ - either this is a trick question or the officer isn’t 100% certain how payroll works.

Bless me !!

Write back.......

Dear Sir

Eh?

Yours faithfully

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Replying to exceljockey:
By ireallyshouldknowthisbut
10th May 2018 09:36

Well send the payslips!

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Replying to exceljockey:
RLI
By lionofludesch
10th May 2018 09:50

Ask him if he sends invoices in for his salary.

Never read such nonsense.* What's the officer's name ? Edward Lear ?

*This isn't true.

Thanks (2)
By northernmonkey
10th May 2018 08:47

Are you sure this is even in time? If it's for 5/4/2016 and you filed the Tax Return on time then the cut off for opening a S9A enquiry has long gone. Which only leaves them S29 discovery as an option so, no, they can't do a fishing expedition!

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Replying to northernmonkey:
RLI
By lionofludesch
10th May 2018 09:16

Good point, but I'm inferring that this is a follow-up request and this is not the start of the enquiry.

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Replying to northernmonkey:
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By exceljockey
10th May 2018 09:57

Yes this is a follow up question. Enquiry started Dec 2017 which I believe is within in the time lines allowed. Return was submitted on time.

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By Marion Hayes
10th May 2018 11:40

If he is genuinely looking for proof salary paid to that person look at the online bank services available.
I am able to do a transaction search for a set period for all transactions with a certain party.
The printout contains the account number dates and amounts both received and paid - this should produce one page containing the information requested.
I would offer the minutes of the company determining the salary level, as the 'invoice' creating the salary payments.

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