A client came to me from a firm that is the subject of a criminal investigation by HMRC. On hearing that HMRC suspected criminal behaviour on the part of her accountant, and that they planned to enquire into the returns of every single client of that accountant, she asked me to re-do her accounts and tax returns and re-submit them to HMRC. HMRC has now made an offer, suspending penalties of 15% for a year. Following the judgement in J R Hanson and the commissioners for HMRC (UKFTT 314), in which it was held that no penalty was payable as the taxpayer was entitled to rely on his accountant's advice, should I ask that the penalty be removed from the offer entirely?
The tax advice service provided by my PI insurer thinks that if I do this, HMRC might withdraw the offer of suspension, and we might end up having to go to the Tribunal.
Incidentally, I have spoken to the Inspector a couple of times and he seems quite reasonable. Would it be worth a phone call?