Fee protection case studies

Anyone who submits a tax return can be investigated by the taxman - over the years we have helped many of our clients defend their position in the face of HMRC’s onslaught. Here we explore what happens when HMRC come knocking...

Capital Gains Problem

HMRC Launched an Aspect Enquiry into the capital gains aspect of a tax return. The inspector queried a number of “negligible value” claims, reinvestment relief claims (and clawback) and the sale of a property. Full documents were requested of exactly why the shares were of negligible value, including letters from the liquidator.

The Revenue head office became involved before the position was eventually agreed by HMRC.

An independent specialist was appointed who was able to explain that

HMRC had misunderstood the rules surrounding retirement relief.

HMRC also refused to allow any relief for the sale of furnishings with the property. The accountant was eventually able to persuade HMRC that he should reduce the sale proceeds by an amount received for furnishings, for capital gains tax purposes and hence, the overall tax burden was reduced.

Expensive Misunderstandings

An engineering company was selected for enquiry for the first time.

Despite the turnover being in excess of £20 million a relatively inexperienced HMRC officer was allocated to the case. There was clearly a lack of understanding in the queries being raised which lead to constant requests for explanations and documentation.

After over 2 years and several meetings the case was closed without any adjustments.

PAYE Trouble

A business was selected for a joint PAYE and VAT visit.

A team of HMRC officers turned up at the premises and reviewed the business records in detail. They had so many questions that they had to go away at the end of the day and write requesting further details. After an exchange of correspondence they accepted the VAT position was correct but said there was a pool car that should have been treated as a company car and a self employed subcontractor should have been an employee.

Tax in excess of £30,000 was at stake. Fortunately a fee protection scheme with PFP was in place. This paid for attendance at the visit, dealing with the questions which followed and the subsequent disputes.

Expenses Concerns

A four partner firm of doctors in the Midlands was investigated by HMRC due to their concerns over certain expenses claimed in the accounts.

Following a brief exchange or correspondence, the case involved an exhaustive meeting with HMRC inspector raising very specific queries on the expenses attributable to both the partnership and the individual personal expenses claimed. The investigation centred almost exclusively on this area and was only settled after the accountant prepared a detailed analysis of expenses claimed over a five year period.

Don’t leave yourself exposed - sign up to the Tax Investigation service today to protect yourself against the expense of an enquiry. It costs less than you might think.

For more information on what is included in the insurance please request a copy of the Policy Summary from your local office. Email or call your local office for more information.