Tax advisers could soon be compelled into providing more information to the Commissioners under new rules proposed by HMRC. Currently, tax advisers (like lawyers) are excluded from HMRC’s powers to inspect a person’s position regarding a potential penalty and to collect information to help identify any other person who enabled the tax avoidance arrangements. But the Commissioners are proposing to remove the exclusion, meaning advisers could be compelled to provide information regarding clients involved in ongoing tax investigations.
It is important to note that all client communications to accountants are not legally privileged and are easy for HMRC to obtain; however, communications to lawyers are legally privileged and highly confidential. Therefore it is beneficial to the success of many of our clients’ cases that we be instructed to instruct an experienced forensic accountant on your behalf.
What are the current rules?
Currently, tax advisers are excluded from HMRC’s powers to inspect a person’s position regarding a potential penalty and to collect information to help identify those who are enabling tax avoidance.
However, the new suggested rules would remove the exclusion which previously allowed tax advisers to withhold information from the authority.
What do the new rules mean for tax advisers?
Tax advisers would still be able to withhold any information they do not think is required for the purpose of checking the penalty position.
The background notes show that tax advisers are not the end target for new measures as HMRC have stated that, “many tax advisers adhere to high professional standards and are a very useful source of advice and support to taxpayers” and that the “measures are not aimed at such professionals”.
Why have HMRC proposed new rules?
The purpose of policy change is part of a wider push aiming to increase penalties for enablers of tax avoidance.
The proposals have been introduced following Sir Amyas Morse’s independent review of the loan charge – a fee levied since the start of the last tax year on those who benefited from disguised remuneration schemes.
The Government have also pledged to provide extra funding support for HMRC’s crackdown on tax avoidance. The Chancellor has stated that this would create an additional £4.4 billion in revenue over the next 5 years.
Risk of using an accountant against HMRC…
It is important to note that all client communications to accountants are not legally privileged and are easy for HMRC to obtain; however, communications to lawyers are legally privileged and highly confidential. Therefore it is beneficial to the success of many of our clients’ cases that we be instructed to instruct an experienced forensic accountant on your behalf.
Although you may have instructed an accountant in relation to your accounts and tax matters for yourself or your business, in most cases your accountant should realistically only assist you in tax compliance matters whereas we specialise in assisting you in relation to any investigations that HMRC have brought against you. We regularly work with accountants to ensure that collectively we are able to obtain the best possible resolution to your matter.
What is a Tax Investigation?
A tax investigation is an enquiry conducted by HMRC into the tax affairs and tax payment history of any UK individual, employee, director or company. A HMRC tax investigation can come in many forms and covers a range of taxes covered under HMRC jurisdiction such as: VAT; income tax; corporation tax and capital gains tax.
The type and severity of the investigation is completely dependent on the facts of any individual case. Typically, an investigation generally commences when HMRC notice irregularities in information supplied via a Self Assessment Tax return. A taxpayer will receive a letter from HMRC informing them that an investigation has been opened into their tax affairs and may include a request for information.
It is strongly recommended that you consult a tax lawyer as soon as possible to receive detailed advice on how to take control of the situation and negotiate with HMRC.
Need advice from ex-HMRC Tax Counsel?
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Our expert tax solicitors and barristers have years of experience in of working with and negotiating with HMRC and managing appeals against their decisions at all levels. Members of the team include qualified Tax Solicitors and Tax Barristers whom have vast experience of tax laws and first hand commercial, litigation and advocacy experience previously working in-house for multinational accountancy firms and as senior counsel at HMRC itself.
Our experienced lawyers regularly carry out work in many tax disputes areas, from advising clients on whether HMRC have followed the correct procedures to successfully challenging HMRC’s policies. We have specialist knowledge in HMRC internal processes as well as ensuring that we are able to successfully challenge HMRC decisions in the Tax Tribunals. We have a team of established tax and duties specialist lawyers with a proven track record of delivering authoritative solutions for our high net worth individual and corporate clients.
Expert London Tax Investigation Lawyers
If you need HMRC Tax Investigation advice, we are available to aid you at every stage of the HMRC investigate process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries and investigations. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation.
Our specialist Tax Solicitors and Barristers deliver expert technical knowledge, strong negotiation skills and respected advice, which can make a pronounced difference to eventual tax penalties, charges and liability.
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