Problems with HMRC

When HMRC come calling it can be a very frightening experience and sometimes its hard to know where to turn.

But the main thing to remember is that most things can be sorted out, so don’t panic, speak to an adviser who is experienced in dealing with HMRC when things get a little difficult.

Below are examples of where we’ve helped clients who have come to us in a bit of a mess but where we’ve obtained a positive outcome for them. If you’re in a similar predicament please get in touch we should be able to help.

True Story 1

Our client came to us after HMRC had raised large assessments on them personally for income tax on alleged undeclared rental income and capital gains tax on alleged omitted disposals.

The truth was that the rental income was covered by mortgage interest and the disposals were made at a loss.

Unfortunately the assessments were very old, over 10 years ago. HMRC had raised the assessments in time but the client had ignored things and HMRC were threatening bankruptcy proceedings. The amounts involved were nearly £200,000.

The problem with the age of the alleged errors was that evidence to rebuff the assessments was difficult to obtain. The tax payer has also missed the window in order to appeal the assessments

We were able to successfully negotiate with HMRC and persuade them to take a pragmatic approach  with the provision of minimal information.

The assessments were quashed and the client actually received a tax refund, that covered our fees.

True Story 2

Our client was introduced to us as he and his father were facing bankruptcy and house repossession by HMRC. Their tax affairs had been mis-managed by their previous accountant. They were both faced will tax bills of £40,000 each but in reality with the correct advice at the time these were not correct and in fact should have been nothing.

It can be very hard to persuade HMRC to disregard previously submitted returns and replace them with the correct position. Again due to our ability to negotiate and have sensible discussions we were able to reduce both tax bills to zero.

The client was extremely grateful and is now a valued client.

True Story 3

Our client had a VAT investigation and HMRC identified apparent large under-declarations of VAT. Due to the alleged errors they also raised penalties such that the client had 100% penalties to pay, making the amount due almost £100,000.

We had a close look at the position and were able to quash most of the assessment except for a much smaller amount which boiled down to a very technical issue. Although this amount did need to be paid it was available to be offset by another group company claim. The total cash impact being zero. However HMRC wanted to raise large penalties, again at 100%.

By negotiation we persuaded HMRC to ‘suspend’ the penalties such that they would only be payable if the client encountered further problems.

Lessons Learnt

The point of this post is that no matter how hopeless things look there is often something that can be done to improve the outcome, so talk to an adviser who has experience in dealing with the sharp end of issues with HMRC.

 

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