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'Challenge us' says HMRC

28th Jun 2009
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Simon Sweetman has been looking at the new enquiry powers that HMRC started using in April 2009, and encourages us and our clients to challenge officers if we think they are behaving unreasonably. In particular, Simon wants to hear from members whether the new powers are working in practice.

Now we all know that Schedule 36 of FA 2008 has made substantial and significant changes to HMRC’s powers, allowing them to make requests for information reasonably required to check the taxpayer's return. As far as Self assessment cases are concerned, this can be done if the enquiry window for the return is still open, or an enquiry into that return is still open, which is as it always was, but also where HMRC has reason to suspect tax has been over or underpaid or too much tax relief has been given for the period.

So the difference here is that HMRC can seek to make such a check after the enquiry window has closed, but must have reason to suspect : this will normally mean that they have information from a bank that differs from what is on the return, or information from some other source that contradicts it. The normal practice in such cases will be to seek to remedy only that figure – unless of course that leads to something else – and not to open an enquiry into the whole return even though there will have been a discovery.

Those of you who do not believe that there have been any changes in HMRC’s attitude to enquiry work would do well to read an article by Simon Norris, Head of the Review of Powers, Deterrents and Safeguards team, in Tax Journal dated 22 June. He is on this occasion writing about safeguards, and encouraging taxpayers and agents to challenge the behaviour of HMRC officers if they think it unreasonable : the Act says that an officer may seek documents that are “reasonably required” to check the return.

Normally, of course, HMRC will want to see originals, and the officer is then entitled to copy or remove those records, but, Mr Norris says, that does not mean that he can insist that the taxpayer makes copies at his or her own expense, nor that records can be taken away for an indefinite period. He also quotes an example where the officer wants to see one year’s records but the available disc contains other years as well : the officer should be ready to consider alternatives, such as a printout of the year’s records or, if possible, an onsite examination.

Simon Norris ends the piece by quoting Andrew Hubbard (this year’s CIOT president) as saying The new powers’ regime has a carefully constructed balance between HMRC powers and taxpayer safeguards. A huge amount of work was put into creating a proper framework of safeguards and it is absolutely essential that taxpayers and agents do use the safeguards where it is appropriate to do so. This is especially true in the early stages of the new regime : rights are there to be used.

Right on, says Simon Norris : and right on, says I.

HMRC has established a forum (chaired by Dave Hartnett, but mainly not HMRC people) to oversee the implementation of the new powers, a forum of which I am a member. What we need is evidence of HMRC (and indeed of taxpayer and agent behaviour) to see how this is working. It is most important that this should come from both sides of the fence.

Replies (7)

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By Malcolm McFarlin
30th Jun 2009 16:00

Abuse of HMRC powers
We are currently acting for a client who had her computer, mobile phone and fax machine removed by officers of HMRC in February 2009 during a 'routine' visit. This is contrary to HMRC powers which states that they are allowed to download material from the computer but not physically remove it. The computer was returned after our representation albeit in a damaged state. HMRC, of course, deny responsibility. HMRC also uplifted our client's records which have not been returned nor have copies been received despite our request for copies which was made in March 2009.

We made a formal complaint to HMRC Complaints Unit in May 2009 and received an acknowledgement to say we would have a reply within 15 days.

We have just received a further letter, 23 June 2009, from the HMRC Complaints Team which states 'unfortunately I am unable to give you a date by which you can expect a response as we have a number of cases awaiting investigation at the moment and it is difficult to say how long it will be before a caseworker will be allocated your case' .

I don't think I need to say any more about HMRC powers!

Malcolm McFarlin

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By Nick E Morgan
30th Jun 2009 17:04

More abuse of power
Organisations and countries that amass power rarely do so in order to establish more egalitarian or equitable systems. In the school playground we used to say, “Fighting for peace is like [removed] for virginity.” Forgive the colour, but it makes the point that if you want justice reaching for a bigger stick may not be the answer.

I have the answers, if HMRC genuinely wants to be both more egalitarian AND bring in more money for our poor cash-strapped government - it’s not rocket science either.

They can contact me at if they want to know how to do it.

Nick Morgan

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By elasterry
01st Jul 2009 16:28

HMR&C's integrity
From our recent experience ( over last 15 month's) the integrity of HMR&C has taken on the ethics of its former associate HM Customs & Excise. Ok, the top execs of the latter were removed just prior to the merger, but their rogish behaviour has been taken on by the management of the new HMR&C.

We refer to the fraudulent statistics put out in the staff operating manuals, concerning average performance percentages in various trades, popular with serious organised criminals money laundering & involved with the distribution of goods with illegal title through what appear to be bona fide businesses.

These businesses are filing tax returns with operating statistics at the top of the scale of return in their trade and are thus being incoporated into HMR&C's computer database which spews out all these National Averages, that the inexperienced young Inspectors nowadays treat as "gospel" and thus demand one's clients to "toe the line" and produce similar results.

We operate in an area of deprivation, and for well over 25 years, some trades around here produce results way below the national averages of HMR&C's manuals. In the good old days, our local tax office staff just15 miles up the road knew the situation very well, indeed some of the staff lived in our local town and commuted daily to the local tax office. Now that everything is done in a regional tax office 40 miles away by staff that have no local knowledge of our remote locality, only what is done in the large conurbations, our clients are just being trampled on.

As for HMR&C's image regards the integrity of the Civil Servce, refer to David Gauke MP's entry in "theyworkforus". Google the latter for the correct full address of the website. There you will learn that HMR&C staff are responsible for some 80% of the fraud within the Civil Service! David Gauke, Shadow Minister for Finance, has been raising this matter over some time in "the House".

Terry Hunt, East Lindsey Accounting Services, Mablethorpe

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By abelljms
01st Jul 2009 16:38

hmmmm, could be can of worms
HMRC are 2 bodies
Nice = taxman
Horrid= customs/excise
Also the 2 sides still hate each other

I have been acting for a client, and his companies for several years, and he has been subjected to harassment from HMRC. There is no doubt of this, but of course getting EVIDENCE that they are acting deliberately is much harder without sight of their internal papers, and even then I think much of it is due to malicious officers actions which will be unwritten.

However what is true is that when I was in a meeting with a couple of HMRC officers last year, one of them said to me “why are you acting for Mr.xxxx? These matters we are looking at involve you because you are a director of the company. And of course it will affect your ability to act for other clients. You are ruining your own relationship with HMRC”.

Proof that this vicious statement has been acted on can be demonstrated by the fact that if I apply for a VAT registration using MY name it is only processed after months of delay, whereas if I leave my name out it goes through on standard time frame. I have two specific examples I can show anyone who wants the data. In both cases I only shifted them by invoking FOI, and then magically the number was issued in each case immediately – funny that……………………..

As I have said before, I could fix much of tax fraud very easily as I work on the inside, but I'm not doing it for free.

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By kenfrost
02nd Jul 2009 10:18

How can the HMRC forum be independent if it is chaired by Hartnett, and includes members of HMRC?

Ken Frost

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By Simon Sweetman
02nd Jul 2009 17:17

independent ?
Yes, it's chaired by Dave Hartnett. But I don't work for HMRC, nor do Paul Aplin, Andrew Hubbard, Derek Allen etc. Unless you think we are tools of the establishment, of course.

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By Nick E Morgan
03rd Jul 2009 12:04

independent ??
Could the person who made the comment "Yes, it's chaired by Dave Hartnett. But I don't work for HMRC....." say who they are. Thanks Nick Morgan

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