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Tax investigation

What can they ask for

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Long story short - I recently took over a client who's previous accountant has suffered a very bad illness. Its come to light that he has had an investigation ongoing with HMRC for 2+ years. Its clear that this previous accountant did a royal F up on the lot. Thing is HMRC are saying that they dont care as its the clients due care to do their own taxes. I am well aware of this but the extent of the damage done is horrific. This investigation has given me such brain fuzz that I cant think straight - I barely got any records out of previous accountant and it seems most was destroyed/shredded.

Am I correct in thinking I will not be help liable for any wrongdoing on this investigation - its not like I produced the worng info. I know the client will be gratefully effected - am I right in thinking they can sue this accountant?

Lastly - HMRC are requesting proof of various gift payments from relatives. We provided them with the transfer/statement of the monies but they now are requesting the family members bank statements for three months prior - can they do this? It seems to me a witch hunt to be fair but as many of you are aware HMRC are like a pack of wolves.

Any advice will be appreciated

Replies (7)

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By Rammstein1
10th Jan 2020 13:23

Pass it to on to someone with experience.

Also, if the previous accountant has suffered a very bad illness, should you be suggesting that they are sued?

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By Dib
10th Jan 2020 15:21

Quote:

Pass it to on to someone with experience.

Also, if the previous accountant has suffered a very bad illness, should you be suggesting that they are sued?

If the client has suffered a loss due to the previous accountant's negligence then why shouldn't he sue?

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By bernard michael
10th Jan 2020 13:53

What is the legal basis of the investigation. Do you have correspondence stating that.

No of course you can't be sued.
The client should make a formal complaint to the previous accountant , whose PFI should kick in

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Psycho
By Wilson Philips
10th Jan 2020 14:02

You should be accountable only for any improper handling of the enquiry itself - which is why I agree that such matters are best left in the hands of competent professionals.

Yes, HMRC can ask for relatives' records but only if germane to the enquiry - you are entitled to ask exactly what it is they're hoping to find. I had a case, many years ago, where I ended up disengaging due to the dishonesty and crass stupidity, among other factors, of the client. It transpired that he, a retailer, was suppressing cash takings and giving the cash to a relative who banked the cash and in turn 'gifted' back the exact same sum to the client a week or so later. In the circumstances, and with the benefit of hindsight, I consider that the Inspector would have been perfectly entitled to request sight of the relative's records. Whether she did so or not, I don't know. (This was pre-MLR)

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By Vaughan Blake1
10th Jan 2020 14:54

Personally I would arrange a meeting with the Inspector on the grounds that you are new to the enquiry and need to get to grips with it. You can then ascertain the Inspector's viewpoint and the likelihood of 'cutting a deal'.

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By Accountant A
10th Jan 2020 15:08

Quote:

Am I correct in thinking I will not be help liable for any wrongdoing on this investigation - its not like I produced the worng info. I know the client will be gratefully effected - am I right in thinking they can sue this accountant?

I think the fact that you ask the question suggests to me that you should hand over the work to someone familiar with investigations.

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RLI
By lionofludesch
10th Jan 2020 15:21

Quote:

I think the fact that you ask the question suggests to me that you should hand over the work to someone familiar with investigations.

Sounds reasonable.

On the relatives' bank statements, yes, of course HMRC can ask. No, the relatives don't have to provide them. Sadly, without them, the client looks to be struggling to prove his assertion about the gifts. He needs to be aware of that.

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