Now we’ve all heard of how much money HMRC needs/should bring in with tax investigations, employment status reviews, PAYE investigations etc and as soon as possible you would think. Well, this morning was a relevation, in an attempt to speed up an enquiry I had agreed with the investigating officer that it would be a good idea to have a meeting, at our offices to go through the information they required, no problem until this morning. The very apologetic investigating officer explained that they had been told that due to all the cutbacks they were unable to travel for a meeting and would have to deal with the enquiry via correspondence and telephone. After checking it wasn’t 1st of April I said that this made no sense as this would prolong the enquiry because of HMRC backlogs etc to which to be fair the officer completely agreed, so what is going on – is this just a daft local decision or something more widespread?

HMRC you need to wake up and use some common sense – meetings can speed up the whole process – you are investigating someone or some entity, so they shouldn’t have to pick up the cost – you should be prepared to travel and guess what if there is a settlement to be made the money will be in the coffers quicker and the officers involved will be free to move onto another case – simples!

Well we have a date for the emergency Budget and that is 22 June 2010, but what can we expect:

• Increases in employees national insurance contributions, but not employers NIC
• Increase in the rate of Capital Gains Tax to probably 40%
• VAT rate to increase from 17.5% to 20%
• Increase in the level of PAYE/NIC compliance checks
• Increase in the personal allowance level to nearer the £10,000 mark
• A crack down on tax evasion, albeit HMRC cannot seemingly tell the difference between this and tax avoidance – the latter being perfectly legal

The Government has indicated that most of the initial debt reduction will come from spending cuts rather than tax rises but we would recommend that you review all your employer compliance procedures with the help of an employment tax expert as they will be seeking extra revenue from basically whereever it can get it from – so call us today on 0800 917 9176 and see how we can save you money

HMRC have recently published details of their internal review of tax enquiries, employer compliance reviews, tax investigations etc in relation to cases that have occurred since 1 April 2009 which does make for interesting reading:

“Outcomes excluding penalty cases 3,443 cases out of 18,526

Upheld: review complete – 2,603 (76 per cent)
Deemed Upheld: time limit expired – 20 (1 per cent)
Varied – 349 (10 per cent)
HMRC decision cancelled – 471 (14 per cent)

Outcomes penalty cases 15,083 cases out of 18,526

Upheld: review complete – 6,281 (42 per cent)
Deemed upheld: time limit expired – 48 (0 per cent)
Varied – 793 (5 per cent)
HMRC notice cancelled – 7,961 (53 per cent)”

In basic english this means that 24% of non penalty cases were varied or cancelled and a staggering 58% of penalty cases were varied or cancelled

The results clearly show that it is in your interest whether you are an individual or a company (where there is reason to doubt HMRC’s assessment) to complain. We would also add that it is advisable to obtain specialist help when HMRC comes a calling, it’s not a time to dabble so give us a call on 0800 917 9176

There are still a number of individuals and companies out there that think the Inland Revenue won’t pursue them to the ends of the earth regarding tax debts – you need to wake up, seriously!

HMRC compliance visits and tax investigations take on real significance when you focus on HMRC’s mission to maximise tax take, as such its stated litigation settlement strategy (LSS) aims to push for a full settlement or court action if it believes it has a better than 50/50 chance of winning.

Now the issue is always the fact that HMRC have deep pockets when it comes to arguements, you only have to look at some of the employment status cases that have taken 3/5 years to conclude but the cost in terms of money, time and effort expended by HMRC (and delayed cash flow for the government’s coffers – this is most likely the issue) in pursuing these disputes is mounting.

Therefore some in HMRC are considering using a more “common sense” approach – can it be possible?

A new unit would split the dispute resolution unit from the anti avoidance division. The mission of the new unit would be to resolve the disputes more quickly; thus improving cash flow, even if the speedier resolution means a lower tax bill – I can’t see that being popular within HMRC, can you? So stick with the principle of getting things as correct as possible in the first place and if you’re not sure give us a call on 0800 917 9176 as a PAYE/NIC healthcheck could save your company, in more ways than one!