Posted on 9 July 2014
The Low Incomes Tax Reform Group (LITRG) has reported a letter sent to a lower paid taxpayer requesting time-barred information about a past tax return from HMRC.
Following a recent ‘nudge’ campaign by HMRC directed at high net worth individuals outside of the usual statutory framework, letters were sent from HMRC telling these individuals that their ‘effective rate of tax’ for tax year 2011–2012 was lower than average and asking for verification of this. This is despite the fact that HMRC are prevented by law from opening a ‘formal’ enquiry into tax year 2011–2012 as the deadline for doing so was 31 January 2014.
The letter sighted by LITRG requested information about a 2010 tax return asking the tax payer to produce evidence of invoices, advertisements, a breakdown of hours worked per week, the rate charged and a summary of bookings and appointments. The letter also claims that it is not an enquiry, but “part of HMRC security reviews”.
The LITRG is urging any unrepresented taxpayers who receive such ‘informal’ requests to treat them with care. Whilst the LITRG accepts that HMRC have a duty to make enquiries into tax returns, it says: “We do not believe that requests like the one above should be sent to unrepresented taxpayers. This is because HMRC have a broad range of formal powers to request information from a taxpayer and such formal powers carry associated statutory requirements and protections for the taxpayer. Informal requests, however, have no such rules and safeguards.”
Jackie Hendley, Head of Tax at Smith Cooper commented: “These informal requests are a minefield for those who lack proper information about taxpayer safeguards. We would strongly recommend seeking specialist advice from a professional who will be able to advise you on the correct procedure to follow when dealing with HMRC.”
Our Tax Team can be contacted here.