HMRC Procedures

[Harry63]

I have a client who has just undergone a CT enquiry and a settlement figure has been agreed and as such the enquiry is at an end.

However, my client has now received a letter from HMRC Employer Compliance asking for figures for private expenditure for tax and nic purposes. Private expenditure did form part of additions agreed in the CT enquiry.

I don't have any real problem with the tax issues but I am perturbed by HMRC's procedures in this. The CT enquiry lasted 12 months and to my mind HMRC should have raised this as an issue during this time so a settlement could have been reached as part of the ongoing enquiry. My client has the added expense of a "supplementary" enquiry. Do these people not talk to each other? Should I have anticipated this?

I would appreciate any comment either positive or negative from anyone who has been in a similar position.

[wamstax]

Yes you should have preempted this problem. However all is not lost as unless the EC enquiry is into a different period I would be going back to the CT Inspector and asking him/her to intervene as clearly if the company had any PAYE issues during the period of the CT Enquiry the Inspector had a duty to raise this with the company at that time. Certainly this would be my view if there were any private expenditures of the directors/shareholders discussed during the enquiry and relating to the Employer Compliance period. Sometimes they don't talk to each other but good practice would be for the Employer Compliance Officers to check with the CT Inspector before embarking on an ECR.

However as I said at the beginning you should have been thinking ahead. It is not clear if the CT Enquiry has been done by contract etc. etc. but if it has it might be possible to look at the offer as encompassing all the Company's unpaid duties for the period of the enquiry included in any letter of offer.
While not advertising I would be happy to speak to you on it if you are inclined 07751720507.
Otherwise best of luck

[wamstax]

By way of supplementary advice on the "talking to each other" aspect you might find the following couple of link interesting reading:-
http://www.hmrc.gov.uk/manuals/emmanual/em0333.htm
especially the 4th & 5th paras. if the CT & ECR enquiry periods are the same. Also EM0331 would be useful. The rest as they say "I can consider the whole thing if you are still in doubt. See my website "http://www.wamstaxltd.com" if you want to take a discussion forward on a professional basis as inevitably there are always points and facts that are impossible to relate in a few senteces.