HMRC targets HNW taxpayers for “pre-filing discussions”

In a novel pilot scheme, HMRC has targeted up to 1,000 individuals with income exceeding £200,000 & assets of at least £2 million to have a voluntary phone call with HMRC in what they claim is a bid to help prevent errors in tax filings before they occur. We warn taxpayers to take care and take advice before engaging in such “pre-filing discussions” which could lead to tax disputes.

Our team of solicitors and barristers represent your interests at all times. We start off with a customised strategy for each client. We can provide you with the best representation in negotiations with HMRC and defend all forms of HMRC enquiries and investigations.

The call for pre-filing conversations is targeted at high earners with complex tax affairs, regardless of whether the taxpayer already has an adviser or a customer compliance manager at HMRC. HMRC told one of the sources that the discussions would help them and the customer in ensuring that they pay the right tax by discussing unusual or one-off transactions which may have an impact on their tax affairs.

However, we as experts would warn HNW (high net worth) taxpayers that if they end up disclosing something that HMRC does not agree with, they will most likely risk higher penalties. A disputed tax liability carries a penalty of 15-30% of the tax owed and hence it is encouraged to stick to the traditional route of submitting a tax return and an explanatory note. If taxpayers are invited to attend these meetings with HMRC, it is recommended they do so with a competent legal advisor.

The Chartered Institute of Taxation’s technical policy and oversight committee has described this move of HMRC as a subtle undermining of the relationship between the adviser and the client. The Institute of Chartered Accountants in England and Wales recommended that if a taxpayer wished to take up HMRC’s offer, there should be a pre-discussion with the authority to clarify what topics are going to be covered, who will attend from HMRC and what are the expectations about next steps on both sides. Ideally a specialist tax solicitor should attend. All discussions with a tax solicitor are confidential due to client confidentiality rules enshrined in the laws of the UK (these do not apply to tax discussions with non-lawyers such as accountants or other tax advisers that are not solicitors).

Our team of solicitors and barristers represent your interests at all times. We start off with a customized strategy for each client. We can provide you with the best and confidential representation in negotiations with HMRC and defend all forms of HMRC enquiries and investigations. Our specialist Tax Solicitors and Barristers deliver expert technical knowledge which ensures best results for our clients. We are based in legal epi-centre of London, just across the road from the Royal Courts of Justice.