This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Help! Sole trader HMRC investigation

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Help! Sole trader HMRC investigation

Postby wamstax » Wed Dec 20, 2017 6:39 pm

Oh well at least we’ll be able to enjoy Xmas and New Year and await the next instalment.

By the way you could make a general payment on account of unpaid taxes (calculated on the lowest additions to profits and rentals that are definitely due) so that interest on that amount of the final unpaid tax figure will cease to run from your date of payment.

It also would be an opportunity to ensure that they hold over collection of any further taxes taking up bd’s very valid point about getting the tax postponed.

The other advantage is that you can show in any penalty etc discussions that as soon as you were aware of an inadequacy of taxes paid you paid up and was therefore fully cooperating with their enquiry.

If you want to follow that route send an email to the investigator saying that you can see some tax will have to be paid and you would like to make a without prejudice general payment on account. Can they give you a reference against which you can make the payment and instructions for paying such an amount online ASAP. Can they also ensure that collection of all taxes reflected on their assessments are fully postponed pending agreement of all matters.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

bd6759
Posts: 3094
Joined: Sat Feb 01, 2014 3:26 pm

Re: Help! Sole trader HMRC investigation

Postby bd6759 » Wed Dec 20, 2017 10:59 pm

Hi bd
Comment regarding review was if they were not prepared to accept the appeal and put in on basis that if they had any doubt in accepting appeal it would tip the balance in OPs favour.

Independent reviewer isn’t going to let a case go to FTT where they have invalid assessments and penalty determinations. They would probably send it back to the investigators manager with recommendation that all adjustments proposed by OP are complied with
You say that as if HMRC had a choice whether to accept an appeal, when no such choice exists. If a valid appeal is made, HMRC cannot choose not to accept it. If the appeal is not valid then there is no option for an independent reivew because there is no appeal.

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Help! Sole trader HMRC investigation

Postby wamstax » Wed Dec 20, 2017 11:06 pm

Bd - We didn’t know if appeal was in time
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

classicmechanic
Posts: 15
Joined: Sun Dec 03, 2017 5:51 pm

Re: Help! Sole trader HMRC investigation

Postby classicmechanic » Mon Mar 12, 2018 5:04 pm

Hi all
Just a mini update
They have written back and are
a: trying to apply a £2400 payment to my accounts that i have already explained to them is accounted for in the subsequent year's accounts. (which would mean they
are trying to count it twice which is ridiculous )

- i will tell them again they can't add this one.

b: have asked for my personal bank account statements from 6 April 2011 to 5 April 2014 to support property income computations.

Can they ask for these? I can imagine a whole new can of worms with them asking what every little transaction is in my personal bank account. they already have one year's statements and are trying to count every payment into that as business related and are asking me to prove otherwise. How would I be expected to remember what £20 from Mr Smith was for in 2011 and be able to supply evidence to back it up?

Cheers

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Help! Sole trader HMRC investigation

Postby wamstax » Mon Mar 12, 2018 5:18 pm

As regards this why are they asking you to prove rental receipts from 2011? Have they proved an irregularity in relation to property income for the enquiry year? If so then they would have grounds for such a request? If they have not proved any careless error in relation to the property income then I would ask them for the basis on which they consider that it is reasonable to make the request and then you can see if you agree.

If they want to add the receipt in an earlier year then they would have to subtract it from the year you included it. On the face of it this adjustment is more technical than culpable.

You could be silly and redact everything else in the statements apart from property income but this could be a red rag to the bull
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

robbob
Posts: 2807
Joined: Wed Aug 06, 2008 4:01 pm

Re: Help! Sole trader HMRC investigation

Postby robbob » Mon Mar 12, 2018 6:31 pm

a: trying to apply a £2400 payment to my accounts that i have already explained to them is accounted for in the subsequent year's accounts. (which would mean they
are trying to count it twice which is ridiculous )
If hmrc are being picky they are within their rights to adjust entries based on the correct accounting principles rather than where you wanted to declare it .
What was your rationale for declaring that income in the subsequent year - if it was a deposit for goods / services provided for in the next accounting year i would expect them to back down once you provide evidence the money was "earned" in the following year. Even if they are proved right in the adjustment make it clear that they accept its a timing issue and that they will consent to that subsequent year being revised the other way - hopefully that following year is not out of time in that regard.

b: have asked for my personal bank account statements from 6 April 2011 to 5 April 2014 to support property income computations.
I would second what warmstax says - unless they have found anything wrong with the year of enquiry that would suggest there was issues in previous years i would stick to the year under enquiry only - get them to confirm that this is acceptable - if thats not acceptable to them ask them specifically what legislation allows them to look outside the relevant year if nothing has been proven wrong with the year under enquiry.

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Help! Sole trader HMRC investigation

Postby wamstax » Mon Mar 12, 2018 7:07 pm

Robbob
“hopefully that following year is not out of time in that regard” - I would suggest that they are duty bound to make the corresponding adjustment under S36 TMA if they are contending that the adjustment is wrong as a result of carelessness - which I think is inevitable in this case given what they’ve got wrong in the past.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

classicmechanic
Posts: 15
Joined: Sun Dec 03, 2017 5:51 pm

Re: Help! Sole trader HMRC investigation

Postby classicmechanic » Tue Mar 13, 2018 12:03 am

the 2400 was a payment for a vehicle sold (to overseas customer paid by bank) June 2014 but the sale was counted in my July 2014 accounts as thats when he came to collect it. My trading tax year runs July to June.

Since it is now 2018, are they allowed to even ask for my bank statments for year ending apr 2012? Just curious.
Thanks again for your wonderful advice and support, it has kept me sane.

wamstax
Posts: 1869
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Help! Sole trader HMRC investigation

Postby wamstax » Tue Mar 13, 2018 12:31 am

There is a case for saying that the sale was made on the date of collection and not before with the receipt being a payment in advance. Tell the Inspector to consult his Accountancy unit specialist to learn the ropes. In my view you were correct.

Well put it this way they can ask for whatever they like but they cannot go back more than 6 years in a formal request unless they can prove fraud
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

bd6759
Posts: 3094
Joined: Sat Feb 01, 2014 3:26 pm

Re: Help! Sole trader HMRC investigation

Postby bd6759 » Tue Mar 13, 2018 7:28 pm

the 2400 was a payment for a vehicle sold (to overseas customer paid by bank) June 2014
If you sold it in June, then the sale is recognised in June. The date of delivery is irrelevant.


Return to “Tax Investigations and Enquiries”

cron