Please refer to CG63950 onwards - some of the examples of part disposal even talk about shops. HMRC allow part disposals and subsequent sales within three years in the conditions set out in the guidance.
If the loan is released or written off when the employment ceases then that release can be treated as income. However if the loan continues to be paid at the same rate then it is difficult to see how that benefit relates to his employment now he has left
As an ex tax inspector I am shocked at how some HMRC officers are ignoring the rules and regulations.
I agree with the earlier posts, i.e. ask what information HMRC has received, when they obtained this information and ask the person to get their manager to provide their reasons for believing this constitutes "discovery". If the discovery relates to termination payments then it could be the result of an employer compliance review on the employer and this would not reflect neglect or fraud on your clients behalf.
Stick to your guns and ask the manager to respond otherwise you intend asking for a closure notice via the tribunal service.
1. HMRC normally ask if the client took reasonable action to verify the codes, i.e. did the client call HMRC and ask if this is right. Two of my clients did and HMRC always accept reasonable excuse in that instance.
2. If the employer did not request a P46 when they started and operated full PA then the employer is responsible for the loss. However, if HMRC do not chase the employer the tax is still the individuals responsibility.
3. As you client had three employments and HMRC issued codes I would argue that the client had filled in all the paperwork provided by the employer, they had subsequently received coding notices from HMRC and reasonably believed that their affairs were in order.
Only 1) above is what HMRC would definately accept, the others are just speculative attempts however tribunals have found in favour of the taxpayer more than once.
A lot of IT and even construction industry companies refuse to engage self employed individuals because of status decisions being made retrospectively and they are reluctant to employ because of all the rights and responsibilities associated with employees never mind the need to pay Employers NIC.
Instead the company insist that the person undertaking the work does so through a limited company. The status decision then resides with the individuals limited company and all the tax enquiry problems lie with the individuals limited company. The one thing this does is put the IR35 obligation on the individual running a "Service Company".
As long as you don't have an engament that extends beyond 18 moths for the same company you will probably be OK and due to the level of turnover you are unlikely to be a HMRC target but IR35 is something to take into account when assessing the risks of being a Limited Company.
I was once the dispensation officer for an Area and HMRC view dispensations as a temporary concession that can be withdrawn retrospectively if the stated conditions do not accord to facts.
A dispensation is meant to cover items of reimbursed expense or expense that would fulfil the "wholly, exclusively and necessarily" criteria. A hire car available for private use (including the ordinary daily commute) would be liable to car benefit, and if not used for private purposes then it would be a company expense and not included in a dispensation or P11D.
HMRC have slightly relaxed some of the conditions for granting a dispensation but having spoken to former colleagues it appears they will try and challenge dispensations in business record checks.
In summary, if the company pay an expenses or reimburse expenses HMRC can theoretically charge tax on the benefit unless a dispensation exists. The company should always ensure that the expenses are reviewed and authorised independently and check the 480 booklet to see if the expense is covered by a different part of the legislation, i.e. car benefit or accommodation benefit rules (in which case a dispensation cannot be granted).
If you open a new workbook and enter 27 Aug 10 it will convert the entry into a date format it recognizes. However, if you open the cell and fomat it as text, enter 27 Aug 2010 it will keep the cell in that format no matter what subsequent format you try and use.
Excel does recognise the constituent parts as a date but will not reformat. I cannot imagine an easy way to convert it to a date once its been entered as text.
My answers
HMRC manuals may help
Please refer to CG63950 onwards - some of the examples of part disposal even talk about shops. HMRC allow part disposals and subsequent sales within three years in the conditions set out in the guidance.
If the loan is released or written off when the employment ceases then that release can be treated as income. However if the loan continues to be paid at the same rate then it is difficult to see how that benefit relates to his employment now he has left
Discovery
As an ex tax inspector I am shocked at how some HMRC officers are ignoring the rules and regulations.
I agree with the earlier posts, i.e. ask what information HMRC has received, when they obtained this information and ask the person to get their manager to provide their reasons for believing this constitutes "discovery". If the discovery relates to termination payments then it could be the result of an employer compliance review on the employer and this would not reflect neglect or fraud on your clients behalf.
Stick to your guns and ask the manager to respond otherwise you intend asking for a closure notice via the tribunal service.
1. HMRC normally ask if the client took reasonable action to verify the codes, i.e. did the client call HMRC and ask if this is right. Two of my clients did and HMRC always accept reasonable excuse in that instance.
2. If the employer did not request a P46 when they started and operated full PA then the employer is responsible for the loss. However, if HMRC do not chase the employer the tax is still the individuals responsibility.
3. As you client had three employments and HMRC issued codes I would argue that the client had filled in all the paperwork provided by the employer, they had subsequently received coding notices from HMRC and reasonably believed that their affairs were in order.
Only 1) above is what HMRC would definately accept, the others are just speculative attempts however tribunals have found in favour of the taxpayer more than once.
IR35
A lot of IT and even construction industry companies refuse to engage self employed individuals because of status decisions being made retrospectively and they are reluctant to employ because of all the rights and responsibilities associated with employees never mind the need to pay Employers NIC.
Instead the company insist that the person undertaking the work does so through a limited company. The status decision then resides with the individuals limited company and all the tax enquiry problems lie with the individuals limited company. The one thing this does is put the IR35 obligation on the individual running a "Service Company".
As long as you don't have an engament that extends beyond 18 moths for the same company you will probably be OK and due to the level of turnover you are unlikely to be a HMRC target but IR35 is something to take into account when assessing the risks of being a Limited Company.
Dispensations from HMRC perspective
I was once the dispensation officer for an Area and HMRC view dispensations as a temporary concession that can be withdrawn retrospectively if the stated conditions do not accord to facts.
A dispensation is meant to cover items of reimbursed expense or expense that would fulfil the "wholly, exclusively and necessarily" criteria. A hire car available for private use (including the ordinary daily commute) would be liable to car benefit, and if not used for private purposes then it would be a company expense and not included in a dispensation or P11D.
HMRC have slightly relaxed some of the conditions for granting a dispensation but having spoken to former colleagues it appears they will try and challenge dispensations in business record checks.
In summary, if the company pay an expenses or reimburse expenses HMRC can theoretically charge tax on the benefit unless a dispensation exists. The company should always ensure that the expenses are reviewed and authorised independently and check the 480 booklet to see if the expense is covered by a different part of the legislation, i.e. car benefit or accommodation benefit rules (in which case a dispensation cannot be granted).
It was originally formated as text
If you open a new workbook and enter 27 Aug 10 it will convert the entry into a date format it recognizes. However, if you open the cell and fomat it as text, enter 27 Aug 2010 it will keep the cell in that format no matter what subsequent format you try and use.
Excel does recognise the constituent parts as a date but will not reformat. I cannot imagine an easy way to convert it to a date once its been entered as text.