HMRC’s emails and calls could land you in hot water
Delving into the detail of HMRC’s new guidance on how it contacts taxpayers and employers, Herminder Sandhu has uncovered some surprising practices, which could have wider connotations.
Vigilance in all spheres of life is paramount, from dealing with the bank to buying a concert ticket. It is no less a requirement in the performance of operational tasks when running a business – some of which will also minimise the chances of scrutiny from regulatory bodies such as HMRC.
The recent guidance on genuine HMRC contacts and phishing emails is designed to update businesses of HMRC’s new and ongoing initiatives, but specific extracts give cause for a level of care and, yes, vigilance.
For example, paragraph 1.2 of the guidance titled ‘Tax challenges faced by self-employed taxpayers’ confirms that self-employed taxpayers may receive a letter from market research agency Ipsos MORI during September and October 2019 informing them about their research.
Further, the taxpayer may get another letter and be contacted by telephone inviting them to take part in an interview or a focus group. HMRC states that all answers will be treated as confidential and any information provided would be used for research purposes only.
However, as sceptical as it may seem, there is always the possibility that it may prompt an HMRC enquiry into other parties in the engagement chain.
Although the likelihood of such an enquiry into a business seems remote, a systematic, periodic review of all your engagements is prudent to include assessment of internal processes and procedures and the written terms as well as the day-to-day practical working arrangements in place with any individuals. A laborious task it may seem, but one certainly worth the hassle.
Paragraph 1.6 of the guidance is entitled ‘National Minimum Wage and National Living Wage – telephone interviews about employment’. It confirms that individuals will be contacted by HMRC and asked some basic questions. They will be given the option to keep such contact from their current or former employer.
Forgive me for the cynicism but such contact always runs the risk of investigation by HMRC either as a perceived risk based on information gleaned or a complaint made by the individual.
You may be aware of the government focus on worker rights and the ever-increasing policing of the National Minimum Wage (NMW). Given the background, a periodic overview and a more detailed assessment in regards to payment and entitlement to the NMW is time well spent.
The guidance also mentions SMS text messages, which may be sent to individuals advising of new entitlement to the NMW following a recent rate increase or a rate increase due to a birthday.
It is quite astounding how such a minor oversight can lead to underpayments of the NMW, and how quickly they accumulate and ultimately result in negative publicity.
No doubt most businesses will have procedures and processes in place, as well as payroll software which would ensure such increases are implemented so avoiding such pitfalls.
Having said that, it is always worthwhile reviewing the systems which check the relevant NMW is applied, especially, on the introduction of a new payroll system.
Paragraph 1.11 refers to compliance checks for mid-sized businesses and other bodies. It mentions contact by telephone to carry out an interview as well as a request for business records.
It has been an increasing trend for compliance checks to be carried out in this manner over recent years. HMRC’s view is that this is an efficient use of resources and cuts down on the cost to the public purse.
Experience shows that such a check may indeed be conducted purely by telephone and written correspondence and be brought to conclusion. However, it is certainly not always the case. Indeed, in some instances, it can lead to extended communications due in part to the limitations of the opening exchanges and, ultimately, face-to-face meetings in any event. So much for cutting costs and the desired efficiency.
If a business is contacted by HMRC for such a compliance check to be carried out by telephone (or indeed any other way) the initial discussions and exchanges can prove crucial, fundamentally indicative and critical as regard the route such a compliance check may take.
As always preparation is key and a dummy run, so to speak, is always advisable.
The guidance may be helpful as regards genuine HMRC contact and to recognise phishing or bogus emails. Such initiatives can educate individuals on the one hand, but it also brings with it an element of risk given the possibility it could be used to identify and initiate enquiries.
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Herminder is a senior consultant at Chartergate Legal Services Ltd specialising in CIS, Employment Status and Employment tax since 2013. He spent a number of years working for HMRC in all compliance areas before joining one of the Big Four firms. He then moved to private practice before specialising further when he joined Accountax Consulting...