Simon Sweetman responds to his critic; "So, after all these years, am I still an inspector of Taxes at heart?"
It is true that I believe that HMRC is changing the way it does compliance, and I think it is changing for the better despite all the genuine worries about new powers. I think this because I see the evidence of intention to change : it has to be said that the proof of the pudding here is going to be what happens in real offices to real taxpayers. And it is also true that the way the process of merger and change has been handled has caused a great deal of pain and inefficiency throughout the system and most of that pain has been felt by taxpayers : but we may be getting through that, though so far it is the larger companies and the better off who are getting a better service through specialized offices.
When I wrote about enquiries recently the responses included a certain amount of paranoia. This was no surprise : it is an attitude I have seen time and again, and it has been fuelled over the years by the way in which some inspectors have behaved – I have worked with Inspectors who thought it a victory if the taxpayer cried. But fear and loathing is not a basis for negotiation, and after all negotiation is often what handling an enquiry is about, especially when your client has become almost terminally muddled in their record keeping.
But the paranoia is especially pronounced on the subject of meetings, which are seen as a kind of lengthy mugging. I have to confess to having been ambushed myself – this was by my own client, who suddenly decided to tell the Inspector that he took the first £50 out of the till every week before he recorded everything. Needless to say, he hadn't bothered to tell me !
HMRC will argue that a meeting can save a great deal of time in an enquiry, because you can cover the ground it might take months of letter writing to deal with. More importantly, in my view, a meeting can enable you to come to the core of any problems rather than constantly skirting round the real issues. Oddly enough, my client's £50 a week actually helped : there was now a clear focus to the enquiry and it was settled fairly quickly after that.
Now when I go to a meeting with a client it is because I believe that at this stage a meeting is the right way to make progress (whether the Inspector thinks so or not – there are times when it is me who asks for a meeting). I also want – as HMRC is supposed to provide – a clear agenda, and if the Inspector attempts to depart from that agenda then I say so and would suggest to my client that he or she does not attempt to answer any questions. Especially if the Inspector attempts some kind of off the cuff means test : if I think it useful I will normally suggest that I talk to my client about it later and will certainly not allow it to carry forward.
In my view a refusal to attend a meeting gives one message to HMRC : you are afraid of what will happen, either because you know something about your client's affairs that you don’t want to tell HMRC or because you think you will be bullied and not be able to handle it. Well, I'm sorry, but if that's the case then you shouldn't be handling enquiry work at all : you should be handing it on to someone who knows what they're doing.
One respondent seemed proud of delaying cases for as long as possible. What about his clients? Nearly all the people I have worked with have been worried, unable to sleep, and desperately keen to get things finished and would hardly want to think tht their own representative was slowing things down.
So I will say this here and now: the average small practitioner general purpose accountant is not experienced or knowledgeable enough to make a good job of enquiry work, and should work with a specialist to achieve results. Of course that is difficult, because it means that it will cost the client money in fees. That money will almost certainly be saved in tax, but that may not be obvious.