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Where Taxpayers and Advisers Meet

HMRC wearing my patience thin

DerekMoore
Posts: 11
Joined: Tue Oct 29, 2013 5:07 pm

HMRC wearing my patience thin

Postby DerekMoore » Sun Jul 01, 2018 9:51 pm

I am undergoing a HMRC check on my expenses as a self-employed person.

Following checks back in 1991 the expenses being claimed were finally agreed on following what was wholly and exclusively for the trade. Following on, another check was undertaken in 2008 and the inspector at the time apart from a very minor debate over one item of equipment of very little value agreed on the continuing business claims. There have been no additional new expenses claim and the ones previously agreed on which have remained in my mind legitimate expenses.

Roll forward to 2018 and a new check but this time the HMRC person is trying to disallow considerably more than I think is justified. My accountant is fighting my corner as am I, but the persistence of the man is wearing my patience thin.
What I can’t get my head around is nothing expenses wise being claimed has changed and he refuses to acknowledge the previous inspector’s decision saying he has the right to disallow anything previously considered by other inspectors.

Does anyone know of any tribunal cases where something similar has been challenged?

Derek

AdamS93
Posts: 136
Joined: Tue Sep 26, 2017 6:28 pm

Re: HMRC wearing my patience thin

Postby AdamS93 » Sun Jul 01, 2018 11:22 pm

What expenses is the inspector not happy with?

DerekMoore
Posts: 11
Joined: Tue Oct 29, 2013 5:07 pm

Re: HMRC wearing my patience thin

Postby DerekMoore » Wed Jul 04, 2018 2:36 pm

Vehicle as I don't keep a mileage log and previous inspection both allowed a 50% personal use so never need to. Will do after this but then who in HMRC is going to sit down and actually check all the mileage covered

Use of home for office and storage. His figures for what he thinks is allowable are so low I have to wonder whether HMRC actually know the value of a lot of things such as the cost of office space and rental of storage space never mind the pain of having every time to go there to work. Far easier to work from home using one room and a storage building.

robbob
Posts: 2594
Joined: Wed Aug 06, 2008 4:01 pm

Re: HMRC wearing my patience thin

Postby robbob » Wed Jul 04, 2018 3:15 pm

Just some general thoughts of mine - note others may take a different viewpoint here !

Vehicle as I don't keep a mileage log and previous inspection both allowed a 50% personal use so never need to. Will do after this but then who in HMRC is going to sit down and actually check all the mileage covered
Unfortunately i would say the onus is 100% on you to fully substantiate all claims made - if you have got away with an agreed 50% split before that doesn't mean anything really.
Note any evidence you can give in this regard should be looked at by the tax inspector so you should be able to justify your claim by providing some samples / estimate details of normal journies or something similar to justify your claim. If your claim is reasonable a simple log for the next 2-3 months may suffice if this is fair and reasonable (Ie you don't suddenly stop using personally or use a peak travelling season work wise - that can work both ways if you drive down to france on personal one off annual trip that may prejudice the figures against you.

Use of home for office and storage. His figures for what he thinks is allowable are so low I have to wonder whether HMRC actually know the value of a lot of things such as the cost of office space and rental of storage space never mind the pain of having every time to go there to work. Far easier to work from home using one room and a storage building.
Yes i would say sometimes hmrc in this regard will come up with nonsensical figures - but it''s equally likely they could screw you down on the detail if what you say gives them the ammunition they need to - some expert advise here may help you. Note your logic is a bit out of kilter here - you can't claim just because you would have spent similar elsewhere - the facts are that if there minimal additional actual costs then really you aren't paying owt extra, thankfully hmrc are normally reasonably fair when fair proportionate calcs are used - although that may not be the case here. I would say in this regard though if the facts are as per previous visit and hmrc accepted those calcs as being reasonable back then i would not expect them to question them now without the inspector being able say why - eg more recent guidance issued that make previous calcs obviously out of synch with what you could expect to claim.

You always have the option to ask another inspector to look at things if you reach impasse you want to leave this option as late as possible though if you can still get the current bod to see reason to some degree.

It may be worth running everything past an expert too just to see if it is the way you are presenting your case that is not really working with hmrc.

bd6759
Posts: 2839
Joined: Sat Feb 01, 2014 3:26 pm

Re: HMRC wearing my patience thin

Postby bd6759 » Fri Jul 06, 2018 11:38 pm

Motor expenses - Jolaoso is a good case: http://financeandtax.decisions.tribunals.gov.uk//Aspx/view.aspx?id=5289
(13) We find that there was no evidence before us that justified a 50% allowance of
motoring expenses. We find as a primary fact that the Appellant has not
discharged the burden of showing that more than 10% (as HMRC have
generously allowed) of the motoring expenses related to the profession.
Basically, the burden is on you to show that 50% is correct. If you have no evidence, than how will you discharge that burden? Worth noting that judicial opinion on travel expenses was tightened as a result of the Dr Samadian and Dr Jones decisions.

Use of home

As robbob says, it matters not a jot what it might cost you to rent a storage locker. The fact is that you do not, and therefore you do not incur that expenses. It costs very little to have a storage box sitting on a floor of a spare room.

DerekMoore
Posts: 11
Joined: Tue Oct 29, 2013 5:07 pm

Re: HMRC wearing my patience thin

Postby DerekMoore » Fri Aug 17, 2018 7:31 am

Boy am I glad these HMRC clowns don’t run businesses they would go broke.

Well got that sorted. Previous decisions will stand, but in future vehicle usage requires mileage records. By my estimate from google I probably do more than 50% business miles probably somewhere between 55% and 60% with one car. As I have 2 vehicles I will be able to offset the claim for mileage now against both instead of one, as the other does little mileage this is a bonus. so HMRC got what they deserved, less income tax revenue, just means I have more dam paperwork to file.
I decided to hire storage space including a small office room from a mate at about £4,000 per annum which is more than the £800 they were squabbling over for using my home for office and storage, so more lost tax revenue and that should bring me in below the HRT 45% threshold, so I can put more into a pension fund so more lost tax revenue. And still letting me claim £120 per annum as I will continue to use my home as an office for more than 25 hours a month. Explain that one to me.

HMRC Net gain £0
HMRC Net Loss approx. £2.5k to £3k per annum
My net loss £1k, but one benefit is less mider from the wife as I won’t always be at a home office but still only 5 mins away, so probably worth the £1k for the peace and quiet.

I tried to explain that to the HMRC guy and it falls on deaf ears, no wonder the country is going broke with pen pushing, trick box, jobs worth’s bureaucrats like that with nothing between their ears. No wonder Costa Coffee, Google and other big corporation pay sod all. Why can’t I talk to a good Yorkshireman Tax inspector who understands that famous Yorkshire war cry. “HOW MUCH”.

Always maintained the HMRC inspectors should be on a bonus based on what they manage to claw back and save in future years like a sort of sales commission, and they would then start chasing the cases where the most could be made instead of chasing grandma for £50 for an incorrect error on her pension payments or messing genuine businesses like me around who are not cooking the books and, in the end, costing the treasury money and giving me a headache.

SteLacca
Posts: 402
Joined: Fri Aug 07, 2015 2:17 pm

Re: HMRC wearing my patience thin

Postby SteLacca » Fri Aug 17, 2018 11:21 am

You appear to have a distorted view of what HMRC do, and of what lost revenue is.

Take the example of rented storage/office space. Whilst they may collect less tax from you, the rental income is taxable in the hands of the landlord, and so negligible loss.

As regards what HMRC do, despite popular opinion, enquiries are not necessarily to increase the tax take. In fact, during my HMRC days I would deliberately select cases for enquiry where I suspected that the taxpayer may have overpaid tax. It was about collecting the right amount of tax. Not about setting out to punish taxpayers.

Lambs
Posts: 1396
Joined: Wed Aug 06, 2008 3:15 pm

Re: HMRC wearing my patience thin

Postby Lambs » Fri Sep 14, 2018 12:54 pm

Ste,

Perhaps you could do us all a favour and help HMRC to appreciate that Mission Creep is not always a good thing. They may listen to you more, if you are formerly of the "Dark Side". (So to speak).

Only in the last few days, have I seen a mission statement that starts out by saying "our job is to maximise revenue"...

When HMRC was re-tasked, the tax profession (and the general public) did not get that memo.

Best,

Lambs

SteLacca
Posts: 402
Joined: Fri Aug 07, 2015 2:17 pm

Re: HMRC wearing my patience thin

Postby SteLacca » Mon Sep 17, 2018 2:54 pm

I'm aware that the mission statement was changed from collecting the correct amount of tax to collecting as much as possible regardless of the legality.

And so, sadly, my old ethos will no longer carry weight.


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