SPOUSE'S BANK STATEMENTS

by **new_to_taxation** on Fri Nov 13, 2009 6:22 pm

Hi

Long time reader, but first time poster here.

I currently have a sole trader client who is under HMRC Enquiry for 2006/07.

I have supplied the Inspector all of her business and private bank/building society statements for the year in question, but now the Inpector has asked to see the spouse's accounts and also review his private side.

Does he have the power to get these, if we do not supply him.

Many thanks for reading

Bob

by **Trevor Scott** on Fri Nov 13, 2009 10:38 pm

Unless the wife's sole trader records have been broken and therefore leave the wife’s personal financial affairs open to investigation, also the wife’s private financial affairs are mixed up with the husband’s financial affairs, then a request for the husband’s accounts seems disproportionate and therefore unnecessary/unreasonable. The Officer sounds may just be trying his luck in trying to investigate the husband via the wife’s investigation, but so much depends on what, if any, tax offence has been established and the structure of the spouses business/financial affairs.

If you give more details then we could give a more complete response.

by **wamstax** on Sat Nov 14, 2009 12:27 am

The basic principle is that the Inspector can only do what is reasonable and if he has not proved any irregularities or "reasonable" doubts about the veracity of the traders records then the Inspector is not allowed to starty fishing. If he is serious of course and cosniders that he has established irregularities then inevitably he will resort to a Schedule 36 formal notice on the husband for the third party information.

Be sure that you don't get bluffed into giving him something that he is not entitled to otherwise your client would of course be looking to you for recompense if as a result HMRC stumble on to irregularities.

However do remember that since April they have had better powers to call on businesses to inspect their records (and of course VAT officers can look at current records)

by **Trevor Scott** on Sat Nov 14, 2009 12:41 pm

Surely the idea of “reasonable doubts” is such a subjective type of concern, that it could be used to excuse virtually anything despite not having actually proven anything.

I would argue the “necessary” element of Article 8 HRA98 would completely undermine any attempt to investigate a person’s private financial affairs, that is unless a tax offence had first been established that had made further investigation necessary. If such a tax offense was established, presuming the wife does not own part equity in business, then a wife’s private affairs could only be investigated if their personal financial arrangements were entwined.

by **wamstax** on Sat Nov 14, 2009 6:10 pm

But an Inspector must have risks that they are addressing - and possibly an enquiry plan - so unless he set out the concerns at the outset to include the traders means then clearly he should be put to justifying his approach (unless of course it is clear that the trader has a case to answer). An Inspector can only investigate the financial affairs of the trader and unless there have been clear inadequacies in the record keeping that involves the husband then the Inspecotr should be asked to justify his approach (before you discuss matters appropriately with your client)