Case Studies

Case Study: PAYE Enquiry

A company was subject to a PAYE compliance check that turned out to be anything but routine. HMRC went through all PAYE records but ultimately concentrated on every single item of entertaining expenditure. They required details of all people attending – including staff – and justification of every single item. This proved to be an administrative nightmare as they continued to probe for over two years.

Eventually HMRC accepted there was nothing untoward but over £10,000 of fees were paid under the Tax Investigation Service.

Case Study: Cross Tax Enquiry

HMRC launched a “Cross Tax Enquiry” into an engineering company that encompassed a full review of all entries on the corporation tax return and four years of PAYE and VAT records.

It became evident very early on that HMRC was unsure exactly what they were looking for and were undergoing a fishing expedition.

The questions asked were very detailed and seemingly endless and after one meeting alone, over one hundred questions followed. Despite the best efforts of the advisor, the enquiry dragged on for two and a half years. With only minor adjustments to be made, over £35,000 of fees were settled under the Tax Investigation Service.

Case Study: Declared Information

HMRC considered they had information to suggest a client had not declared all of their income. They launched an enquiry and refused to tell the client what information they held. The enquiry lasted for over three years and cost over £11,000 to deal with.

It turned out HMRC’s information was incorrect, but the accountant’s fees were still settled under the Tax Investigation Service.

Case Study: Capital Gains

A client returned a capital gain on their tax return and HMRC wanted to check a valuation included in the calculation of gain. They asked for a whole host of information – including some they were not entitled to!

With the assistance of a professional advisor HMRC were only sent the information necessary and the valuations were eventually agreed after corresponding with the valuations Office.

This work cost over £9,000 which was paid under the Tax Investigation Service. The enquiry lasted over twelve months.

Case Study: Partnership Strife

A farming partnership was selected for enquiry by HMRC. They looked at all sections of the business reviewing every invoice and all aspects of the business from growing crops to the running of the farm shop. There was a lengthy discussion over a claim to capital allowances.

After two years the enquiry was settled with only minor add backs. Fees of over £5,000 were claimed from the insurer.

Case Study: Personal Matters

HMRC was convinced something was missed off a director’s personal tax return and investigated both his return and his limited company. The enquiry lasted for over three years as HMRC continued to pry into all aspects of both the company and the director’s personal affairs. Eventually the enquires were settled for nil! Fees of over £7,000 were settled by the insurer.

Case Study: Misunderstood!

HMRC obtained information from a credit agency notifying them that an individual had taken out a mortgage on a property.

HMRC refused to say what further information they held but carried out a full review of the individual’s tax affairs. Trying to prove a negative and look for more tax when none was due was impossible.

Eventually after three years HMRC settled the enquiry for no additional tax payable. Over £7,000 of fees were settled under the Tax Investigation Service as a result.

Case Study: VAT Compliance Visit and Dispute

A VAT trader underwent a VAT compliance visit. Two officers turned up and went through all aspects of the bookkeeping and VAT records. They queried the method of partial exemption being used despite the fact the method had been agreed after a previous HMRC inspection.

A great deal of research had to be carried out by the accountant and eventually, HMRC again agreed with the method used. Over £4,000 in fees were paid under the Tax Investigation Service.