Freelance journalist Nick Morgan, author of 'Tax Investigation For Dummies' considers whether taxpayers subjected to an HMRC enquiry should apply to the Tax Tribunal for closure. 

Can I Force the Investigation to End?

If you feel that an invasive investigation has gone on for a long time - particularly without any discovery - you can apply to the Tax Tribunal to make HM Revenue & Customs (HMRC) close the case (HMRC Staff Appeals Handbook: AH2125 - Appeals Handbook - SA Appeals: Assessments, Amendments and Enquiries: Application for a Closure Notice: Application to Commissioners).

The investigating officer will have to justify keeping the case open and then the likelihood is that the Tax Tribunal will give a deadline for the case to end.

Schools of Thought

There are two broad schools of thought on this: firstly forcing an investigator to close a case prematurely may result in higher assessments as you have less time to establish your innocence. The second school of thought - and the correct one in my opinion - is that the longer the case is open the more HMRC fishing will take place and the greater the pressure on the investigator to bring in a catch, so it’s best to close ASAP.

After closure notices (see EM1975 - Working the Enquiry: Closure Applications: Contents for details on the procedure) are issued you will have 30 days to appeal. If you accept the HMRC figures they will become binding to all parties, if you appeal HMRC can revise the ‘final’ figures to be presented before a Tax Tribunal.

A Long Process

In my case the closure notices were for just over £6k, when I appealed HMRC doubled that figure to an eye-watering £12k then - after a year of negotiation and a month before the Commissioners' Hearing (the Commissioners have now been replaced by the Tax Tribunals) was due to take place HMRC reduced their figure to just over £4k. The whole case took just under four years.

[ See more of Nick Morgan's Tax Investigation ordeal in a previous article - Everything you Wanted to Know About a Tax Investigation - Should I Go to a Meeting? - Ed.]
 
The above is an extract from 'Notes From Hell - Tax Investigation for Dummies' by Nick Morgan, a freelance journalist who was the subject of an HMRC enquiry into his self-assessment return. The book can be ordered from TaxationWeb's sister website, TaxBookshop.com

Article Added Saturday, 24 October 2009 | 2808 Hits

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