I am all in favour of people paying the right amount of tax. I have little tolerance for anything else. But I'm going to add my voice to that of a number of accounatnts expressing concern about HM Revenue & Customs new 'compliance interventions'.
If the Revenue have wanted to raise question on a set of accounts or a tax return they have, since 1997, had to open a formal enquiry. That has, admittedly, been a bit daft. Before that date (when they introduced self assessment) many enquiries were dealt with on a specific enquiry basis, often being resolved by a single exchange of letters. But they made the system more cumbersome, and now they're trying to find ways to simplify it again.
Well, I've got no problem with that. But I have with the way they're going about it. There are three reasons:
- If a taxpayer appoints an agent they want to know the Revenue will deal with the agent. Why else appoint one? Despite which the Revenue are addressing the enquiry to the tax payer, copy (if you're lucky) to the agent. Sorry, that's not on. Whilst I am strongly critical of accountants and the quality of much of what they do, right now the system is dependent upon their involvement to make it work. Undermining them, does not help. Nor does giving the taxpayer a near heart attack (even if they can face opening envelopes from the Revenue - and I assure you I know many people who can't) help the cause of 'customer relations'.
- Some enquiries start with a phone call to the taxapyer, even if they have an accountant. Again, this is wholly inappropriate and is designed to undermine the role of the accountant. In the long run (and maybe the short run) this will eb wholly counterproductive. And once more, the taxpayer will find it threatening. That's not the way to start a 'voluntary' investigation, whih these are supposed to be;
- Thirdly, if these are undertaken on the basis of risk assessment, not on the basis of known error the assumption should be that the taxpayer has got things right. In which case the wording of the following template is simply unacceptable:
I am not suggesting that you have made such errors but I would like you to review your declarations made within the last 12 months and let me have, by [insert date], details of how any such disposals were dealt with together with:
¬? confirmation that your declarations are correct; or
¬? a schedule of disposals along with your revised figure for output tax, in order that I can recalculate your tax liabilities.
If there is anything you do not understand or would like to discuss, you are welcome to ring me on the above number.
To ask for a revised schedule in advance is to assume guilt. Well, if I was employed by the Revenue I might well do just that (because there is ample evidence that the black economy is rampant) but respect for the due processes of law is still required, and that requires the appearance of believing the taxpayer is innocent until proven guilty.
The Revenue have never been good at this, but this is a step in the wrong direction. There are better ways to improve the tax yield, relationships with professional advisers and taxpayers than this. I suggest that this experiment is dropped very quickly, but at the same time the old fashioned limited enquiry of an accountant that the Inspector knows and respects (which they would if they stayed in one place long enough to get to know who is, and who is not, likely to cause them problems) would be a lot more useful.
In the meantime, I hope they'll stop beating their wives/husbands (delete as applicable).