As more information emerges about the Business Records Checks programme, it is apparent that members will have some difficult decisions to take when advising clients who receive a letter from HMRC requesting an appointment. Should you recommend the visit proceeds?
The CIOT normal advice to members is that they and their clients should co-operate with HMRC. As these visits under the ‘test and learn’ pilot are being carried out under Finance Act 2008 Schedule 36, HMRC have the power to visit the client. Such visits under the trial are predominantly for the benefit of HMRC to enable them to learn from the pilot and ensure their staff are adequately trained for the full checks which are due to start later in the year.
We appreciate that attending a visit will give rise to costs for taxpayers, especially where their agent is present, and such attendance will often be recommended. HMRC have indicated that they do not intend to charge penalties during the trial, unless there are exceptional circumstances, and there is the possibility that some useful advice could be provided by HMRC.
It should be noted that a taxpayer can refuse entry to HMRC and no penalty is chargeable for such refusal unless the visit has been authorised by a tribunal. A taxpayer might consider such a strategy if for example the meeting time proposed is particularly inconvenient. Any taxpayer considering refusing entry to HMRC may need to consider each of the following:
Check with the Officer whether the visit has tribunal backing;
If he has professional fees insurance check with his insurance company as to any impact on the policy; and
Consider any effect on his risk profile with HMRC. While HMRC cannot force entry under a Schedule 36 visit they can arrange a further visit to check records, eg for a post return check for a prior year, which the taxpayer will no doubt feel obliged to attend.