HMRC mistakes

[timinleeds]

Hi I have a tax investigation ongoing since DEC 2008 regarding tax year 2005/2006 I have supplied everything asked by the inspector and within his time limits. He has done a cash flow report which has contained errors in the last three attempts. As I see an error I send the report back outlining the error which then comes back and I find another error. My question is how many times am I supposed to do this? What should I do re the investigation? Should a cash flow chart include cheque payments and reciepts, debit card transactions and bank transfers or should it be ONLY cash?
Please advise

Regards Tim

[timinleeds]

Hi I have a tax investigation ongoing since DEC 2008 regarding tax year 2005/2006 I have supplied everything asked by the inspector and within his time limits. He has done a cash flow report which has contained errors in the last three attempts. As I see an error I send the report back outlining the error which then comes back and I find another error. My question is how many times am I supposed to do this? What should I do re the investigation? Should a cash flow chart include cheque payments and reciepts, debit card transactions and bank transfers or should it be ONLY cash?
Please advise

Regards Tim

[wamstax]

Hi there I think that you would be best engaging with an experienced tax investigation specialist as clearly the Inspector will just keep coming back with revised cashflow figures if you keep on finding individual errors....

A cashflow should be used to isolate cash in the business and check the adequacy of the recorded business takings and other cash items reflected in the records. Inspectors do not of course always understand the business they are investigating (but do not underestimate their tactics) nor have they covered cash handling in sufficient depth (either in thier cashflow or at any meetings) to ensure that they get their figures correct. It is not the first time that I have found accountants/tax advisers ready to accept that the records are unreliable based on an ill prepared and ill considered cashflow so that you really need to address the cashflow errors and inadequacies comprehensively so that you get the matter resolved at the earliest possible date. If it is simple errors that should have not been made then you would be entitled to make a complaint to the investigating officers manager to see if you can get the enquiry stopped if they are beating a dead bush. Alternatively you need to drive home the need for him/her to deal with matters correctly and their performance will be referred to at the end of the day in any settlement(s). Mind you watch that you are not picking up their errors to mask your own concealment of understated takings etc as this could backfire horribly on you if penalties come to be considered.

I hope that this helps but feel free to contact me directly if you would want assistance on a normal client adviser basis
regards and thanks for your question
bill@wamstaxltd.com
http://www.wamstaxltd.com

[timinleeds]

Hi Wamstax thanks for the reply. Appart form getting various details wrong ie wrong bank name and wrong dates the main cause for my concern is three entries in the cash flow that are clearly shown on my bank statement as two payments by debit card and one payment by bank transfer. I am not hiding anything as the inspector has all my records and after all this time ( over 18 months) he seems to be just fishing for anything he can find, the cash flow seems to be the only cause for concern from his view but it contains so many mistakes that I am not confident any of his figures are correct. Should I have a meeting with his superior or write back pointing out his mistakes for a third time.

Regards Tim

[wamstax]

I certainly would not have a meeting with his boss if I was in your boat as clearly all that it would do would be to enable them to question you at such a meeting about the business and then ask you to address matters in relation to the cashflow without you having a suitable opportunity to address matters carefully.

I would send a letter pointing out that this is the third time that you have had to pick up errors on the HMRC's part and that while you are not wishing to be unhelpful you are not prepared to tolerate mistakes that should clearly not be made e.g. including a bank transfer and two debit card payments.

It all depends on how the information has been obtained for the cashflow as to how strong you should be. If for example he has perhaps picked up these payments from your records and they were incorrectly recorded as cash then you would have to watch what you say. However if these are not shown in your records in that way then I would go bull in a china shop and ask for an explanation as to why he is including non-cash items in a cashflow. Depending also on what the cashflow shows I would also consider suggesting that the errors throw doubt on his fundamental approach and that the enquiry should be closed if he has no other points of relevance

[timinleeds]

Hi many thanks for your reply, I will take your advice and send another letter.

Regards Tim

[wamstax]

Any progress Timinleeds?