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HMRC error - enquiry letter

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Good morning all,

So.... I have been back and forth with HMRC regarding a 2016-17 self-assessment tax return enquiry over the past year.

I'm glad to say that HMRC have yielded on the important parts of the enquiry (PPR claim etc.) but we have agreed that a 'low interest loan' was missed off of our client's 2016-17 return (no P11d was issued). Whilst this gives rise to a further £3k tax liability, compared to the other tax at stake, it is a win for the client.

We have received a letter from HMRC today saying 'here is my recalculation including the BIK and now you owe £3k'. It also goes on to ask our client 'why he missed this off his return' etc. so that HMRC can determine the level of penalty that should be charged. The problem is that the letter refers to the 2015-16 tax year and the recalculation has also been done to the 2015-16 tax year rather than the enquiry year, being 2016-17.

This inspector has been quite reasonable and goodwill has been built up over this time so I don't want to be to push my luck, but does anyone feel that this is not really acceptable from HMRC? I mean, our client is going to have to justify why he left this item off his return (careless etc.), whilst at the same time HMRC are issuing enquiry letters and recalculating his tax liability in the wrong tax year.

I'm interested to hear how you would play this out (I have the inspectors email details so could easily contact him in this regard).

Any thoughts or comments would be welcome.