We have seen recently how HMRC have changed tack challenging the traditional ‘cash’ businesses. HMRC have always showed a great deal of interest in such businesses and have opened tax enquiries into the records using their formal channels.
That is now changing. Not for the better, I hasten to add. HMRC are now undertaking unannounced visits. So how do such visits differ from a ‘normal’ enquiry and what are traders’ rights if they have the misfortune of suffering such a visit?
Let us firstly look at a traditional enquiry. HMRC undertake PAYE, VAT, Income Tax and Corporation tax enquiries but in every case they will notify the taxpayer of the enquiry in writing. These enquiries may be routine or HMRC may have some information on a particular tax return, nevertheless we are forewarned about the enquiry.
Unannounced visits are exactly what it says on the tin. However they must be authorised by either an Authorised Officer (a HMRC employee) or the Tax Tribunal. Whatever the authorisation for the visit, the visiting officers must always provide the trader with the formal notice, and importantly give the trader sufficient time to read the notice.
There are subtle differences between an Authorised Officer notice and a Tribunal authorised notice. As we have not seen many Tribunal notices it is important for all traders to be aware of their rights from an Authorised Officer notice.
Although it may be suggested that the Authorised Officer notice provides HMRC unlimited access this is not the case. Indeed if access is resisted HMRC officers may state that penalties will be charged if access is not granted. Although this may be the case, a penalty can only be charged if the notice is authorised by the Tax Tribunal.
Such visits can be destructive to any business therefore we strongly recommend that you have professional representation. Now I do not propose to hand out my mobile telephone number to all clients advising that I can be contacted at any time and will instantly leave my steaming hot Ovaltine and jump in the car (most visits are undertaken towards the end of a day’s trading).
However what I do recommend is that the officers are politely requested to leave the premises and make an appointment to visit at a date more suitable. It may be that HMRC still want to visit at closing time however that still gives us time to attend the visit and be in a position to control what HMRC have access too.
Business owners should not be bullied or threatened by HMRC when refusing entry. HMRC officers will undoubtedly threaten the business owner with penalties. However please bear in mind that such penalties can only be charged if the Tribunal has authorised the visit and entry is refused.
So what are the important points to take away from this blog?
- Check the validity of the notice. If it is signed by an Authorised Officer, deny access and request that an appointment is made for the visits at an agreed date and time.
- Check the date of the notice. The visit must be made within 7 days of the signed authorisation. If it is outside this date the visit cannot go ahead.
- If the visit is authorised by the Tribunal access must be granted otherwise penalties will be charged.
- Check the notice carefully and read all documentation, however long this may take, before allowing access to the premises.
- The notice will list the HMRC officers in attendance. Only the officers listed have the authority to access the premises. If there are additional officers in attendance, they are not permitted access.
- Check the personal details of each officer. If they do not match the details on the notice they have no authority to access the premises.
- If the visit is during normal (accountancy) working hours contact Forrester Boyd immediately.
It is not normally possible to prevent such visits however to be forearmed with the information above you will know your rights and be in a better position to deal with such visits.
For further details please contact Paul Chappell or your regular contact within Forrester Boyd.