We have a Ltd Co client, who runs the business from his flat. First VAT return showed a repayment due (about £5K), mainly because of website costs.
HMRC decided they want to do a VAT inspection, wrote directly to him and then telephoned him to try and arrange. He explained that business is run from his flat, Inspector said he will have to go the HMRC office instead. Client says that accountant does the VAT and shouldn't they be involved, HMRC Officer says no.
We contact HMRC officer to try and sort out - very uppity and starts talking about client having to ring him before making any more supplies, insisting on due diligence checks, etc. Eventually accepts that he is wrong to do so as client not in any type of business where MTIC could apply. Asks us to send him some documentation to be looking at and to suggest meeting date. We send info by email and suggest a date, at our offices. HMRC office refuses as cost to HMRC is excessive (they are around 20 miles away) as two officers for two days. I point out that only 3 months trading, one half full lever arch file of records should not need 2 days. I state that cost to taxpayer of our travelling to HMRC office will be more than their 'cost' of coming to us. HMRC Officer says that taxpayer has the choice of paying us to go or not so not something he should take into account. I quote HMRC guidance both from compliance handbook and factsheets which both refer to it being possible to have the meeting at the agent premises (and in fact we have always held them here - over 70 years there has been a fair few! - not that I am 70 cough cough).
Next we hear is that a senior officer has written direct to client, (says no 64-8 held - although one sent), says that although they 'may' hold inspections at agents, they are not obliged to, further insists on taxpayer travelling to HMRC Office (I must add, they are closer to the Office than we are).
I therefore submit further 64-8 and ask for particular reasoning as to why the meeting cannot be held at our premises, also expressing my concern that we are going 'back and forth' over this, that it is a perfectly reasonable request, etc.
Officer further ignores 64-8 and writes direct to taxpayer stating that he is using formal powers, Para 10 Sch 36, FA2008, to insist that the inspection take place at the business premises (i.e. the flat).
So, I have never seen this before and am unsure what we should do next - any ideas please gratefully received! Should we:
1. Go along with the formal request? (Client really upset about having them in his flat - he flat shares and doesn't want the intrusion). If so, considering we have all the vat records for the period in question, would we be legally obliged to courier them?
2. Refuse, stand our ground with our reasonings and wait and see what HMRC do?
3. Make a formal complaint? The first Inspector's behaviour really was quite bad, and the mistakes he made over the MTIC was pretty shoddy. And why would HMRC not follow their guidance?
So sorry this is long-winded - thank you for all and any advice :)