Can You Find Out Why HMRC Opened An Enquiry?
When HM Revenue and Customs (HMRC) opens a tax return enquiry, a natural reaction of most is to speculate about why HMRC have picked on them.
HMRC does not need an excuse to open a tax return enquiry; a small proportion of tax returns are simply selected at random.
Random or targeted?
However, HMRC often open an enquiry due to information arousing suspicions that something wrong with a tax return. HMRC’s ‘Connect’ computer system collates information from a multitude of sources (e.g., council tax, DVLA) to assist in identifying undisclosed or fraudulent activity.
Also, HMRC sometimes receive ‘tip-offs’ from third parties (e.g., disgruntled ex-employees, dissatisfied customers, jealous competitors & malicious gossips). The taxpayer might consider it in their best interests to source the informant & the information or allegations.
Do HMRC have an obligation or discretion to disclose ‘tip-offs’ to taxpayers?
The Freedom of Information Act 2000 (FOIA 2000) (& equivalent Act in Scotland) provides a public ‘right of access’ to information held by public authorities. Members of the public are entitled to request information without needing to explain the reason. However, information requests can be refused in certain circumstances (e.g., on prejudice or public interest grounds).
The Commissioners for Revenue and Customs Act 2005 (CRCA 2005) imposes a general duty of confidentiality on HMRC. This includes an exemption from disclosure under FOIA 2000 of any information relating to identifiable HMRC ‘customers’ (CRCA 2005, s 23).
Can You ask at the Tax tribunal?
In First-tier Tribunal (FTT) cases, the panel may make a direction to require the information to the tribunal or a party to the hearing. However, it does not necessarily follow that they will require HMRC to tell the taxpayer.
For example, a taxpayer applied for a direction that HMRC to issue a closure notice, on several grounds, including that HMRC disclose why they picked this tax return for an enquiry. Because a third party had been subjecting her to online harassment & made complaints against her to other bodies.
The FTT noted that HMRC had a general duty of confidentiality (under CRCA 2005, s 18), but this could be overridden by a disclosure order. But decided not to order disclosure because:
1. Knowing if a third-party had tipped-off HMRC did not further the hearing but concerned the taxpayer’s wider issues relating to harassment.
2. HMRC had a legitimate public interest in defending its right to confidentiality of this kind of information, so HMRC could meet its obligations of collecting the right amount of tax from all taxpayers.
Practical tip
If you want to see information that a public authority holds about you, then consider making a data protection subject access request under the Data Protection Act 2018.
Are you looking to sell your business?
You want to make sure that you get good price, you need 3 to 5 years to get ready.
Selling a business can be difficult & daunting. You probably won’t have sold a business before, so I’s unlikely that you understand the importance of the various stages. It is easy to become overwhelmed, make costly mistakes that run the risk of wrecking the deal, or sell your business for less than it is worth.
Get the right team to support you along the way, to work with you to:
Ensure the deal is structured in the best way to get a good price & do the tax planning.
Guide you on how to handle the questions your buyer might ask to ensure that you have the right answers.
We perform buyer focused Due Diligence for you, to spot any red flags in how things are to make sure you get the best price.
Help you make sure the business continues to run in the background just in case the deal doesn’t go ahead.
Review or produce the paperwork to dot all the “i’s” and cross all the “t’s” to ensure things don’t fall down the gaps.
Check the contract produced to ensure it is fit for purpose
Handle all the stages to make sure that by the end you get the money you want in the bank, with the least amount of risk for the future.
Be there at the end and help you let go, knowing your business is in good hands for the future.
GUARANTEES
Constant support throughout to plan for & structure a deal, decide the price you are aiming for.
A monthly check in throughout the process, to make sure you understand what the stages are, and what the business is worth each month.
A user friendly explanation of each step that recognises you need understand what’s happening, not be blinded by jargon.
What happens if you don’t have the right advisers in place?
COSTS CAN ESCALATE
You will waste time trying to work things out, potentially spend more in Agent fees & not solve the real issues.
THE RIGHT TEAM
If you don’t have the right team in place, you might end up sharing information that competitors can use to steal your trade secrets.
DROPPING THE PRICE
You might end up having to drop the price to sell the business or not be able to sell at all.
THE PROCESS
Buyers & sellers can think the deal is done when they shake hands on the price. But the reality is, the process is only just beginning.
THE PITFALLS
And if you don’t follow that process correctly, and not see that things are going wrong.
HOW CAN WE HELP?
We will make sure that you understand the process & support you in your journey, help you decide on a target price & work with you on a robust plan to get it.
YOUR FUTURE
We will make sure that you are getting everything that you want & need for the future, whether you are stopping work, or going to start again with something new.
We make the process as easy as possible; it can be an emotional journey; we help you to look at consider & get ready for what happens next.
If you find this interesting and want some more help, why not book a meeting to see what else we can do for you?
