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Unannounced visit by HMRC officers to client at 9pm

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Hi everyone.

Just had a telephone call from a very upset client who had an unnounced visit by 2 HMRC inspectors to her fish and chip shop at 9.00pm last night. She was at home at the time and received a telephone call from a member of staff saying she was needed immediately.

Both myself and my client had no notice of this visit and she was very distressed by it all. They asked lots of questions as to how she ran her business, how many times she banked, how she paid her suppliers etc etc etc. She was very open with them and answered all their questions. They then waited for her to cash up the till when the shop closed at 9.30pm to make sure it agreed with the till receipt, which it did. They then left leaving my client with no idea what would happen now.

My first reaction was one of shock as I have never had this happen before and I immediately wanted to telephone HMRC to find out exactly what was going on but then I thought I would post here first to see if anyone else has any experience of this process and exactly why it has happened.

I have looked at one of  HMRC helpsheets but it says as to why they do unannounced visits is when: you have chosen not to allow us to carry out (not the case here), we have made previous appointments to visit but you weren't there (not the case here) we tried to contact you (not the case here) or we have identified concerns that can only be dealt with by an unannounced visit. If this is the case will they tell me the concerns?

I look forward to hearing from you lovely people!!

Lugalugs

Replies (23)

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By Top_Cat
04th Aug 2011 12:30

Disgraceful and illegal

Several point arise from this.

They arrived whilst the business was full of customers. If they announced who they were or why they were there in front of customers then there may be issues of defamation and breaches of customer privacy.  One customer hearing them could soon start all sorts of rumours with potentially disasterous effects on the business.  Customers could be lost, and suppliers may be loath to grant credit.A visit when HMRC are closed is, by definition, illegal, as your client was denied an opportunity to check their identity and double check it by 'phoning HMRC.Any information given to staff questions asked of staff without the business owner being present are a blatant breach of Data Protection.

I would lodge a formal complaint, making it very clear that as your client was denied an opportunity to fully check their credentials due to HMRC offices being closed. you are not satisfied that these "inspectors" were genuine and may therefore involve the police if confirmation and full disclosure of their identity and purpose and the lawful authority on which they were acting is not received by return.

One question - did they have any chips whilst there (difficult to ignore the small of chips), and if they did, did they pay?  If they didnt pay then you really have them by the you know whats as that constitutes corruption. (Your client/staff were of course too intimidated to insist on payment).

 

 

 

 

  

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By JulieY
04th Aug 2011 16:28

Totally agree

This is absolutely terrible. Can I ask which town/city/part of the country you are in?

I am also dealing with a fish and chip shop enquiry at the moment, but the initial visit was notified and agreed in advance and took place mid morning, before the shop was open.

I agree with TopCat and I would kick up the biggest stink you can, complain to the highest level you can and maybe even get your local MP involved to complain on your behalf. As part of the complaint, I would also demand that the "enquiry" is stopped immediately and not pursued one more minute on the grounds of the appalling HMRC behaviour to date. A claim for compensation too? 

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By rockallj
04th Aug 2011 17:46

Attrocious behaviour by HMRC

This is appalling. Good valid point raised by JulieY and Top_Cat. Complain, complain, complain!

I had a client who was visited and asking the client (in shop hours with customers popping in and out of the shop) if she was VAT registered, and if she wasn't (she is'lt required to be) why not. Our client runs a party balloon shop and was flustered and annoyed that although they showed ID, all questions were being made in front of all and sundry.

 

The two "inspectors" were asking questions about how much this balloon was, what about ribbons, cards etc. and notes duly taken by the other. I have little doubt that the inspectors were who they said they were, but the tone was rather alarming.

 

Then she was given a pre-printed letter with an awful lot of questions about trading, monthly breakdown of takings etc. I have not completed the form, but have "helpfully" written a letter stating that she is only halfway to the VAT limit, and given her SA ref for them to go away and look up our client's recent SA record. I am concerned that completing the form would not tally any notes made by the second inspector and after all, how would we what would have been noted?

 

But then another client wanted to voluntarily register for VAT and he we was told, "you cannot do so because you only trade with known associates and business contacts". Great joined up thinking...........

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Replying to sarah douglas:
Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
05th Aug 2011 10:35

Fishing

rockallj wrote:

Then she was given a pre-printed letter with an awful lot of questions about trading, monthly breakdown of takings etc. I have not completed the form, but have "helpfully" written a letter stating that she is only halfway to the VAT limit, and given her SA ref for them to go away and look up our client's recent SA record. I am concerned that completing the form would not tally any notes made by the second inspector and after all, how would we what would have been noted?

One of my clients received this letter (no visit) and the tone of it was shocking. It's from the hidden economy unit, asks for all the breakdowns and says urgent contact is required if they have been in business for more than 12 months. He's a sole trader with an unrelated trading name and so it wasn't easy to find the taxpayer behind it. I wrote back in the same vein - the turnover is under the VAT limit, this is his UTR, leave alone please. We have had no reply.

I agree with other respondents with regards the OP - the behavious is disgraceful and I would most definitely raise a formal complaint.

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By JCresswellTax
05th Aug 2011 09:22

RU Sure

They are who they say they are?

 

Could be a couple of chancers fishing for info re takings, days owners are in, checking out staff etc for future reference?

 

So they can arrange a break-in or something similar?

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By spidersong
05th Aug 2011 10:12

Illegal?

"A visit when HMRC are closed is, by definition, illegal"

By which definition? The Law (Sch 11 VAT Act 1994) allows them to enter premises at any reasonable time, I'm afraid visiting a chip shop when it's open hardly seems an unreasonable time.

Also HMRC are never closed, various of their operations are 24 hour affairs which is why the officers should be able to provide some contact details to verify their identities as mentioned in factsheet CC/SF4 which your client should have been provided with, as well as showing their IDs

"if confirmation and full disclosure of their identity and purpose and the lawful authority on which they were acting is not received by return."

I assume they gave their names, it should have been on their IDs, the purpose is already stated in their documents "We are visiting you as part of our check to make sure you have paid the right amount of tax."

and the lawful authority is Para 10 of Schedule 11 to the VAT Act 1994, so since I can answer those questions (apart from the names) I'd assume HMRC will have no difficulty doing it.

There may be issues of defamation if they wandered in and said "we're here to check out your dodgy dealings" but if they walked in and said to a member of staff that "We're officers from HMRC and we'd like to talk to the owner" then I'm afraid it'll be a bit difficult to prove defamation, unless you're saying that everyone who is ever visited by HMRC is automatically defamed, in which case let the group actions begin!

So by all means complain if they did defame the owner, or give away priveleged information in breach of data protection, or were otherwise intimidatory or unprofessional. But if you're just looking to complain that they turned up unanounced it probably won't do you much good, HMRC have been doing unanounced visits to chippies and takeaways for at least the last 25 years, and I doubt they'll be stopping anytime soon.

Anyway as to why it happened a) they're doing an exercise on chip shops and will be visiting a dozen in the area to look at (from HMRC point of view cash businesses are high risk operations), b) someone told them your clients suppressing takings, or c) your clients VAT returns deviate from the general profitability of similar shops in the area and so they wish to check takings are not suppresed.

If HMRC have deep suspicions you may find out that they've already sent out officers undercover to buy chips etc from the client so they can check that these appear on the takings records.

So as your question was to ask if anyone has experience of this then the answer is yes there are hundreds, or thousands, of traders around the country who have experienced similar.

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By Top_Cat
05th Aug 2011 15:44

8-8
spidersong PM | Fri, 05/08/2011 - 10:12 | Permalink

"A visit when HMRC are closed is, by definition, illegal"

By which definition? The Law (Sch 11 VAT Act 1994) allows them to enter premises at any reasonable time, I'm afraid visiting a chip shop when it's open hardly seems an unreasonable time."

 

 

What is a "reasonable time" ?

Reasonable is when YOU can check their credentials with HMRC - NOT when you can ring a number they supply on documents they could have forged. The number they provide could be their mate in the next street for all you know.

Also, by arriving at this time they (probably deliberately) ensured that the clients accountant was not available.

"Reasonable time" has repeatedly been defined by the courts with relation to police officers, bailiffs and tax inspectors as between 8am and 8pm.

Even police officers are instructed not to visit homes outside those hours except where a "serious arrestable offence" is involved.

Every chip shop I know opens at lunch times which of course would be a "reasonable time".

HMRC are required to give prior notice of visits, and certainly approaching employees is unacceptable behaviour.

Assuming that the client doesnt have staff hanging around with nothing to do, their arrival must have had a detrimental afect on the service given to customers.

Lastly, should taxpayers really be paying overtime rates to tax inspectors so that they can make late night visits to businesses which could have been checked during normal business hours and from which by definition any tax recovery is going to be relatively minor.  

 

 

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By WhichTyler
05th Aug 2011 11:07

Priority area

HMRC announced their restaurant taskforce back in May (see here and here ), so
notwithstanding whether the inspectors behaviour was appropriate in this case, advisors woud do well to inform their clients in this sector of the increased likelihood of inspection , and what to do when one happens (oh and to keep proper records and pay all their tax!)

 

 

 

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Me!
By nigelburge
05th Aug 2011 11:11

Thanks to TC

This is EXACTLY where he excels and I, for one, am very grateful to him for his knowledge and advice in this field of dealing with HMRC.

This kind of response is invaluable to all of us who occasionally have to deal with HMRC bending the rules to suit themselves. Credit where it is due folks!

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By rhewitt296
05th Aug 2011 11:47

Possible Fakes

I thought I would throw my two pennies in here. I worked in retail for a number of years before moving into the accountancy business but when I was working in retail something similar happened to the store I worked in. It was quite a well known shop. We had an unnanounced visit from 'inspectors' and when I got on the phone to my area manager she called HMRC. Turned out they had no idea who these people were and they were actually from a rival company trying to gain an insight into how we ran things and the money we were making.

Slimmy buggers then openned up a store in the same shopping center a few months later.

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Replying to petersaxton:
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By Top_Cat
05th Aug 2011 12:28

Missed opportunity

rhewitt296 wrote:

I thought I would throw my two pennies in here. I worked in retail for a number of years before moving into the accountancy business but when I was working in retail something similar happened to the store I worked in. It was quite a well known shop. We had an unnanounced visit from 'inspectors' and when I got on the phone to my area manager she called HMRC. Turned out they had no idea who these people were and they were actually from a rival company trying to gain an insight into how we ran things and the money we were making.

Slimmy buggers then openned up a store in the same shopping center a few months later.

 

I think (not certain & too idle to check) that it's an offence to impersonate a tax inspector, just as it is to impersonate a police officer. Your employers should have pushed for a prosecution, with luck they would have said their bosses told them to do it, and procuring an offence is itself an offence. They missed a perfect opportunity to really hammer their rivals.

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By Lugalugs
05th Aug 2011 12:48

WHAT NEXT?

Thanks for all your replies and I'm glad it wasn't just me that was angry. The problem I have now is who do I complain to? Don't really know how to proceed with this as I'm quite new to all this enquiry stuff.

The client is based in Wales and I am in Yorkshire so don't really know if the enquiry was part of a local 'sweep'. My client has recently had to let a member of staff go because of suspected theft so she feels that it is something to do with this.

Thanks again for all your help so far

 

Lugalugs x

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By Chris Smail
05th Aug 2011 13:31

Probably

Sounds like they were acting on information received then.

You should do an FoI request and see what you can get out of them.

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Replying to ShirleyM:
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By jonbryce
08th Aug 2011 12:36

Freedom of Information won't get specific details about an individual tax payer.  A Data Protection request might, but possibly not if it relates to a former employee.

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By Top_Cat
05th Aug 2011 15:03

-

Freedom of information request is a good idea - prepare to be fobbed off.

Also, if you suspect a malicious allegation from a former employee then point this out to HMRC and gently remind them that making malicious allegations could constitute harassment and that by continuing to act upon it having been warned that it may be malicious, they could also be guilty of aiding & abetting.

I would also refer to the suspicion of malice in the freedom of information request as should they conceal or withold evidence of a crime they again will find themselves in an untenable and potentially illegal position.

As regards the complaint - just address it to the Chairman in person (they tend to be less likely to ignore those passed down from above).

 

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By Lugalugs
08th Aug 2011 11:30

Thanks Top Cat

This enquiry stuff is a very scary and new world to me but hopefully with your help I'll learn. You state to address my letter to the chairman, but excuse my ignorance, the chairman of what exactly? Also what exactly is a freedom of information request? Lots to learn but looking forward to it!!!

 

Thanks

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By ringi
08th Aug 2011 12:41

As I tax payer, I have to ask why this is not more common…

As I tax payer I lose out every time someone hides income to avoid tax, we all know this is very common.  

So why is HMRC doing so few spot checks that this is considered abnormal?

Making a few under cover purchases to check that the cash goes into the till, then checking that all cash in the tell matches what the till records shows, seems like a good method to me.  Provider that HMRC understand that there will be a few errors in giving change etc.

(It is also about time that any trade person that offers a discount for cash was assumed to be guilty until proved otherwise, we all know that a “cash price” is just a way of avoiding tax)

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Replying to lionofludesch:
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By jonbryce
08th Aug 2011 12:57

Cash discount is not suspect

Credit and debit cards have charges for the retailer, and cheques can bounce, especially now that the cheque guarantee scheme is no more, so there are perfectly legitimate reasons for offering cash discounts.

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By paulwakefield1
08th Aug 2011 13:22

Another reason for cash discount

If cashflow is very tight

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By Trevor Scott
08th Aug 2011 22:49

HMRC visits

These days, it really is too much to expect an HMRC Officer to refrain from asking loaded questions or abusing their position. Unless accompanied by a Police Officer and Court Order, in which a client should phone their solicitor, clients should be advised to direct any HMRC Officer to the agent; other than to politely ask them to leave the shop, the client should say nothing else.

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By Top_Cat
08th Aug 2011 22:49

Who pays ?
ringi - As I tax payer I lose out every time someone hides income to avoid tax, we all know this is very common.

So why is HMRC doing so few spot checks that this is considered abnormal?

 

 

So tell us, why should businesses stand the expense of speculative "investigations" by tax inspectors?  Do you think I am going to answer daft letters and attend pointless meetings for nothing?

As a taxpayer are YOU prepared to pay my fees?  Or do you perhaps think every business in Britain should put up its prices (and your cost of living) to cover the cost of HMRC fishing expeditions?

Some time ago I had a client hit with a £25k estimated assessment because a tax inspector was basically thick. I fought that assessment and eventually they conceded that their accusations were wrong and reduced it leaving an additional £6 to pay. Of course the client wanted to pay the £6,50 but I instructed him not to, referred the revised bill back to HMRC (Inland Revenue as it was then), and made them redo their calculations as it should have shown zero to pay. They did so.

I then hit them with a £6k bill for my time, they refused to pay, I bounced them straight into court, and of course the court awarded me the £6k plus costs.

Now - are you telling me that the fishing expedition by the half-wit inspector was a good use of taxpayers money?

 

 

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Replying to keithas:
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By PennyC
09th Aug 2011 08:13

It cuts both ways

I could cite examples that would make yours pale into insignificance.

But at the same time I could tell you about a client that was hit with a bill for over £50k because he was basically thick. Why thick? Because admitting to lodging undeclared cash sales in a private bank account is bad enough, but to do so having been caught doing exactly the same thing 5 years earlier ........

Was that a good use of resources? I believe so.

Then there was the shopkeeper who, on enquiry into cash sales, was found to have been involved in illegal tobacco (and, as it later turned out, other substances) trafficking. Was that a good use of resources? I believe so.

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Me!
By nigelburge
09th Aug 2011 09:26

Two sides to every coin

There are investigations where the client is guilty as hell - our job is to reach a settlement fair to both sides.

Then there are the investigations opened by totally incompetent HMRC officers who cannot or will not see that there is nothing there for them, blunder on regardless, make lots of mistakes that an accountancy trainee would not make and only back down when faced with going to appeal.

We have all had them and we then have to take the CD/TC approach which is the only way to deal with them.

Sadly, a lot of the good and competent officers have left are we are left with an awful lot of dross. Then again, it is very refreshing to deal with an officer who actually knows what they are doing!

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