Inland Revenue Fishing Expeditions
Originally sent: August 13, 2004Inland Revenue are well known for conducting ?fishing expeditions?. Whilst most clients would not particularly wish to single themselves out for targeting by the Revenue, and being ?uncooperative? could result in this treatment unless the client is careful, it is always important to avoid being so helpful that an unnecessary opportunity is created for the Revenue to challenge the tax planning the client has undertaken.
The latest ?fishing? expedition which a number of inspectors seem to be conducting, is to send clients a letter stating that there is something in their 2003 return which may need attention. Note the wording here ? ?may need attention?. In most of these cases there is actually nothing specific, and the Revenue are really just hoping this will cause the client to reveal something. Not anything in particular ? just anything at all.
If you have any clients who have received such a letter, quite frankly they can simply ignore it. As there is nothing specific it does not require a specific response, or any other action for that matter.
Any clients who have received this letter and want to call the Revenue?s bluff could write back stating they will be applying to the Commissioners requesting a direction to the Inspector requiring him or her to issue a ?closure notice? within the terms of Section 28A(4) of the Taxes Management Act 1970. If the Inspector allows this to go to the Commissioners it will be down to him or her to demonstrate that there is a valid enquiry on the return and that there are reasonable grounds for it to remain open. As this is probably a ?fishing expedition? there will presumably neither be a valid enquiry nor reasonable grounds and I think you will find the Revenue backing off very quickly.
Adviser Breakthrough Training Solutions Ltd. takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.
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