HMRC close a complex ongoing tax investigation without adjustments

HMRC close a complex ongoing tax investigation without adjustments

This case came to us from another firm of accountants in London. It involved our client being under investigation for undeclared capital gains and rental income for a number of years. The client’s previous accountant and the client had previously written to the tax inspector without taking specialist advice. This had made matters even worse and the case was more complex than it needed to have been. Having taken on the case, we carried out an extensive investigation into the facts and background that lead to our client being involved in the investigation. We found that our client did not have beneficial interest in the assets and therefore had been wrongly put under investigation. Initially, our suggestion was not accepted by HMRC inspectors and after prolonged discussions and supporting evidence, the inspector accepted our technical position and closed the investigation without making any adjustments after almost two years. We are grateful to the HMRC inspector for taking a broader and more pragmatic view of the situation and accepting our position. This was a great success and relief for our client and their family after prolonged period of excessive stress. Please click here to HMRC’s letter closing the enquiry without any adjustments.
Inheritance and Capital Gains Tax Strategies

Inheritance and Capital Gains Tax Strategies

This client came to us following a recommendation by their accountant for strategic inheritance tax and capital gains tax planning. The client had accumulated a number of properties over time and wished to pass these onto their children. There is usually friction between inheritance tax and capital gains tax whereby if the assets are transferred during a lifetime, there is a capital gains tax charge. In contrast, if the assets are left in the estate until death, there is an inheritance tax charge at 40%. The other main issue with leaving assets (especially property) within the estate is that the increase in value over time meaning the inheritance tax liability increases over time. We were able to propose a unique tax planning structure which reduced our client’s estate and therefore the inheritance tax liability. At the same time, the tax planning allowed for no capital gains tax to be paid.

Our analysis: Before coming to see us this client had taken advice on setting up a number of trusts which in our view over complicated matters and ultimately ended with a high tax liability than was required. 

Working families affected by Coronavirus are given an extra boost

Working families affected by Coronavirus are given an extra boost

Families who benefit from government funded childcare support were given a boost today as the Government announced that they would not lose out due to COVID-19.

Working parents or carers, who having been claiming for Tax-Free Childcare or 30 Hours Free Childcare but have temporarily fallen below the minimum income requirement as a result of the pandemic, can continue to receive financial support until 31st October.

Key workers who may exceed the income threshold for the 2020-21 tax year, as a result of working more to play a vital role in tackling the coronavirus pandemic, will continue to receive support this tax year.

Through Tax-Free Childcare, provided by HMRC, families will receive a £2 government top-up for every £8 they pay into their child’s account, up to the value of £2,000 per child, or £4,000 per disabled child in financial support. The money can be used towards the cost of qualifying childcare for a child up to the age of 11 or 17 for a disabled child.

To carry on with receiving the financial support for Tax-Free Childcare and 30 Hours Free Childcare, parents need to reconfirm their eligibility every three months.

HMRC has helped Working Tax Credit claimants with the cost of childcare throughout the CoVid-19 pandemic.  Parents and carers who are in receipt of the childcare element of Working Tax Credits who have continued to pay childcare fees they have incurred, despite their children being unable to access childcare because of COVID-19, must notify HMRC if they expect this to continue beyond 7 September. After this date HMRC will no longer pay the childcare element for those in this position.

Claimants should notify HMRC as soon as possible if their childcare stops or if the costs for their childcare decrease or end.

Parents and carers can contact the tax credits helpline on 0345 300 3900.

Four arrested in HMRC phone scam

Four arrested in HMRC phone scam

Two men and two women have been arrested as part of an investigation into a suspected multi-million pound HMRC phone scam set up to target UK taxpayers.

HM Revenue and Customs officers carried out searches at five addresses in East and West London on 28th July. They found £10,000 in cash, a quantity of laptop and desktop computers, mobile phones and SIM cards.

The four were arrested and questioned by HMRC on suspicion of money laundering offences. Investigations are ongoing.

HMRC’s advice:

Stop:

Take a moment to think before parting with your information or money.

Don’t ever give out private information or reply to text messages, and don’t download attachments or click on links in texts or emails you weren’t expecting.

Challenge:

It’s ok to reject, refuse or ignore any requests – only criminals will try to rush or panic you.

Search ‘scams’ on GOV.UK for information on how to recognise genuine HMRC contact and how to avoid and report scams.

Protect:

If you are suspicious then forward emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.

HMRC close a complex ongoing tax investigation without adjustments

Mirza Shahary Baig v HMRC

The Appellant was a retailer of dresswear and equestrian apparel. He had no shop, but operated from his domestic premises. He sold to market traders and primarily received cash as payment. He had been VAT registered since May 2000. Selected for a pre-credibility check mainly concerned with input tax the visiting officer discovered problems with input tax calculation and when these were resolved, the officer believed that the input tax had been overdeclared, following adjustments by £259,845, plus interest and a penalty of £82,198.20. The behaviour that led to the assessment was considered deliberate allowing the assessment to go back to September 2000. The appeal was made on the basis that the assessment was not to best judgment and that the Appellant’s explanations were ignored. Effectively the Tribunal decided that the performance of the business was not accurately reflected by the VAT returns and that the regular VAT repayment returns were erroneous. As a result the Tribunal supported the assessments as being reasonable and the scale of the penalties. All aspects of the appeal were dismissed. 

http://financeandtax.decisions.tribunals.gov.uk//judgmentfiles/j11758/TC07800.pdf 

Clearly this case is a stark reminder that if HMRC believe deliberate behaviour has led to a tax loss they can seek out the missing tax back in the mists of time up to twenty years before. This Appellant tried to appeal the best judgment nature of the assessment, but the strong case law in HMRCs favour means that this is always a high hurdle to try and clear.