For me it involved a client with a property portfolio. The gentleman was under criminal investigation and had been invited for an interview under caution. He had failed to declare the rental profits for several years. We persuaded HMRC to allow us to compute the profits, losses and the tax liability and arrange for it to be paid in exchange for the criminal investigation being put on hold while we did so. Getting HMRC to agree to this was an achievement in itself and it allowed me to maximise the claims and reliefs available to my client.
For example, for some items of rental expenditure there were no receipts and, had it been left to HMRC to calculate the tax, such items would not have been included as allowable deductions. However, I included those expenses and successfully argued that without doubt the client would have incurred them – receipts or no receipts. I also claimed relief for pre trading expenditure i.e. costs associated with preparing a property for letting. Again, something HMRC would not have included had they continued with their investigation and worked out the tax liability.
So, so far so good you might say and nothing strange about it. Well, once my report and calculations had been submitted, the usual long wait for them to be reviewed by HMRC followed. As with any case, I chased regularly and often received little response from HMRC. At one point, the HMRC individual assigned to the case, seemed to constantly have his phone off the hook (yes, this was in the days of desk top phones!) I recall I had started to enquire about the individual’s manager so that I could contact them instead then suddenly out of the blue I received a revised tax calculation for my client agreeing the tax liabilities I had presented and stating that there was no penalty. This is without doubt the strangest settlement I have achieved in my almost ten years specialising in tax dispute resolution as settlements with no penalty ordinarily only apply where reasonable care has been taken by the taxpayer.
I can’t claim that there was a particular skill of mine that secured the Nil penalty position. All I can say is that in all my time of doing this work, it has never done me any harm to stay on the front foot and regularly chase progress with HMRC.
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