Tax Tips and More – Summer 2017 Edition

Tax Tips and More Summer 2017

Are you Using These Five key Reports to Grow Your Business?

The Best Foreign Exchange for Businesses

What Data can I use, Share or Keep?

The most essential reports for directors looking to grow or have a tighter handle on their business’ performance.

GCEN is a currency and payment specialist unlike any other. The company can save you money on currency conversions and transaction fees.

With information rights at the top of the government’s agenda, do you know if your company adheres to the law?

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Contents

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Welcome and Partners

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Special Feature Are you Using These Five key Reports to Grow Your Business?

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The Best Foreign Exchange for Businesses

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Changes to Personal Injury Law – Is Your Business Covered?

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High-Value UK Residential Properties Liable for ATED

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Xero Add-On Introducing A2X

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Upcoming Events

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Raffingers Foundation Charity Ball 2017

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Client Story 8LEGS Technology

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What Data can I use, Share or Keep?

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Employee Spotlight

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Thought About Investing in Your Own Company?

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“It’s not right and it’s not fair…..”

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Welcome to our SUMMER Newsletter

Raffingers Partners

What a few months it has been, with the government calling a snap general election, which I do not think anyone could have predicted the result of.

Gary Inglis Managing Partner gary.inglis@raffingers.co.uk

Despite being left in another period of uncertainty, this month we bring you articles on things we do know - management accounts! More and more of our clients are seeing the benefit of management accounts and are consequently getting better insights into their business. See our article on page 4 to learn more.

Andrew Coney Partner andrew.coney@raffingers.co.uk

In this edition we also bring you details on ATED, which many companies are still failing to comply with (page 8) and advice on how you should be storing your customer data (page 13). It is essential you begin to think more about this with GDPR coming into force next year.

Once again, we also bring you our ‘Tax From the Trenches’ blog by our Senior Tax Manager, Neill Staff,.

In his latest blog Neill discusses how he was able to help a client who received a series of assessments totalling £340,000 from HMRC based on “perceived shortfalls” in her income. Here Neill discusses his approach and how he managed to get the case closed.

We hope that you find this edition useful. If you would like to contribute to our next edition, please get in touch.

The Partners at Raffingers

Lee Manning Partner lee.manning@raffingers.co.uk

Adam Moody Partner adam.moody@raffingers.co.uk

Suda Ratnam Partner suda.ratnam@raffingers.co.uk

Barry Soraff Partner barry.soraff@raffingers.co.uk

Paul Dell Partner paul.dell@raffingers.co.uk

Roy Butcher Partner roy.butcher@raffingers.co.uk

Upcoming Events - Page 10

Are you Using These Five key Reports to Grow Your Business?

SPECIAL FEATURE

Technology has advanced so much that long gone are the days when all you can generate is a profit and loss report (P&L). Although essential for the success of any business, there are now so many more business reports you can run and consequently more insights you can get into your organisation, that it is criminal not to make use of them.

Below are the five key reports I recommend for any director looking to grow or have a tighter handle on their business’ performance.

Operational Forecasts Where do you see yourself in two, five or ten years’ time? Accurate and up-to-date forecasts enable you not only to visualise your business’ future, but will show you what is attainable and will help you to develop operational and staffing plans geared towards your future goals.

Running a business is never plain sailing and it is impossible to predict every eventuality, (Brexit anyone?!); however, having an accurate forecast in place enables you to build in contingencies and keep your business protected as best as you can. The ideal way to achieve this is to forecast weekly. This will enable you to constantly tweak your forecast to reflect the current market, new competitors and peaks and troughs in your business.

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Where do you see yourself in two, five or ten years’ time?

Three Way Forecasting Your business needs so much more than a P&L report.

Although this gives you a great indication of how your operations look, it does not show you clearly the relationship between the P&L, balance sheet and cash in your business. Profitability does not always equal cash. You need to know when your cash inflows are.

Through seeing these three key points visually you can achieve more advanced insights, such as whether your receipts exceed your payments and single out costs that are eating up your profit.

The key cause of business failure is not having enough cash in the business. These forecasts enable you to see how sustainable your business is and give insights that basic P&L reports simply cannot do.

Scenario Planning If you are looking to grow, what is the best way to do this? Should you take on a new employee? Should you increase the services you offer? Do you have the

capacity to grow into a different region?

Scenario planning enables you to see into the future.

For example, taking on employees is a gamble, yet with scenario planning, you can see when the best time is to hire and how many people you can realistically hire without stretching your cash too far. Whatever ideas you have, scenario planning helps you to see if they are worthwhile and achievable before you commit time and money into putting your plans into action.

What-If Scenarios What-if scenarios allow you to tweak different variables and elements of your business to measure your performance. As with any business, there will come a time when you need to make a difficult decision; what-if scenarios can provide you with clarity on the options available to you now and how your business will be impacted depending on which option you choose. For example, if you are negotiating prices of your stock, you can create multiple scenarios to see how your profit will be affected. You can even see how your business will be affected by sales remaining steady, projected growth and projected loss.

Alerts It is all well and good having up-to-date reports, but you need to ensure you are tracking them and using them to benefit your business. Alerts are the

best feature of reports that can keep you focussed and ensure you do not miss any negative impacts or opportunities. On all reports you can set alerts that notify you when something significant happens, for example if you are over trading and are not getting enough cash in. Something all businesses need to take more control of if they wish to succeed.

In this instance, you can set up alerts for cash and get notified if your bank goes below a set level or if any costs increase. Through alerts you can be confident that your business is protected and you will have enough time to respond should you get into difficulty.

If you are serious about growing your business, there is no excuse not to have up-to-date reports. There are now countless pieces of software that can help you achieve all of the above, such as Futrli, allowing you to set up reports and forecasts without taking vast amounts of time to do so.

For help creating business reports and forecasts for your business, contact me using the details below.

Andrew Coney, Partner 020 8418 2710 andrew.coney@raffingers.co.uk

Your Business Our Passion

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The Best Foreign Exchange for Businesses GCEN (Global Currency Exchange Network) is a currency and payment specialist unlike any other. They process thousands of payments each month for individuals and companies, saving clients’ money from currency conversions and transaction fees. On top of the reduced costs and quicker payments, they also provide market insight and options on how best to mitigate possible currency losses, which is more pertinent now given political risk with elections and Brexit.

GCEN works hand-in-hand with its sister company GCS (Global Custodian Services), which is a regulated cash custodian. This provides flexibility as clients can keep a balance with them. It also means that across the board, they adhere to far stringent regulations that include daily reconciliations of client money.

GCEN/GCS has an online platform which can be used to make payments and amend personal details, showing all available balances in the different currencies. It mirrors typically what you would see on online banking. GCEN/GCS also has worldwide offices and various local banks in Europe and the Far East, to ensure that monies are remitted in the most efficient way.

Raise money for charity GCEN/GCS also provide a pre-paid currency card where currency can be bought at improved rates for use overseas. These cards can be simply used like a debit card and not only allow you to receive bank/ high street beating FX rates, but you will also raise money for charity as you use them. The charity you raise money for can be chosen by you.

GCEN/GCS is ideal for you if you make or receive international payments, make mass payments (payroll) or need information on currency movement to assist with pricing-in/budgeting for future buying/importing.

There are no costs associated with GCEN/GCS to open an account or receive a currency quotation/initial consultation. GCEN is potentially the best foreign exchange for businesses.

Having started the relationship with GCEN over a year ago, GCEN’s services, visions and ideas have allowed the company to advance its services, not only improving the business in a cost effective and more reliable way, but also to benefit our members and internal Processes.

GCEN has created a tailor made personal system, specific to our company needs and are constantly adding new features and updates which continue to benefit, improve and modernise the services we require. They offer competitive rates and incredible customer service.

No request is too much for GCEN and the extremely professional approach with a caring attitude, as well as communication and quick responses to any emails/requests, has instilled a great sense of trust and has provided the opportunity to expand the relationship.

PRS, Treasury Manager

To find out more about GCEN or to be introduced, contact: Suda Ratnam 020 8418 2681 suda.ratnam@raffingers.co.uk

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Changes to Personal Injury Law – Is Your Business Covered?

The Government recently announced changes to the Ogden discount rate affecting the amount of compensation awarded in personal injury cases.

These changes will affect the cost of all company insurance policies that cover personal injury claims such as Motor, Employers Liability, Public, Products and Property Owners Liability.

Ian McFadyen, Group Sales Manager for commercial insurance broker, Berns Brett Limited (BBi), summarises the reform and how likely it is to affect your premium.

The discount rate, explained The Ogden rate is a framework for calculating compensation payments. It works under the theory that the party providing the personal injury award (i.e. your insurance company) can discount the sum provided to the claimant by a small amount because the recipient will be able to make up the difference between the actual award and the sum paid by investing the money.

As interest rates have dropped in recent years, there were some calls to review the rate and from 20 March 2017 it was reduced from 2.5% to minus 0.75%.

Although this may seem like a modest percentage movement, it will have a significant impact on the amount of compensation awarded for the most serious claims.

For example, a 30 year-old employee falls from a ladder at work and suffers serious brain injury. He is unable to resume work and requires long-term care.

On the basis of the previous discount rate of 2.5%, the loss of earnings and care claim would amount to £2.24m. The move to the new discount rate of minus 0.75% increases this settlement figure to £6.14m.

All policyholders are affected, whether low risk or high risk and whether claims free or not.

your claims history is not always an indicator of your likelihood to incur a significant personal injury claim in the future.

The exact amount of increase to your insurance premiums depends on a range of factors such as your company’s trade activities and approach to risk management.

What should I do?

Now is the ideal time to review your existing insurance policies and the level of cover they provide. You should pay particular attention to your limits of indemnity, as these may no longer be adequate in the event of a serious injury.

These changes also serve as a timely reminder of the importance of reducing risks in the workplace and maximising efforts to avoid injuries and accidents occurring in the first place.

Who will be affected?

We can provide a comprehensive risk management service through our sister company, BBi Risk Solutions.

We can help you review your whole organisation and advise on specific procedures, practice and control measures. As well as helping us to identify the level of insurance you require, this process will help you to reduce personal injury claims – and the cost of your insurance – as a result.

All policyholders are affected, whether low risk or high risk and whether claims free or not. Unfortunately accidents happen, often quite unpredictably, and

For more advice, please email Ian.Mcfadyen@ bernsbrett.com, call 020 8559 2111 or visit www. bbicover.com.

Your Business Our Passion

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High-Value UK Residential Properties Liable for ATED

ATED’s were introduced as part of a range of measures aimed at making it less attractive to hold high-value UK residential property indirectly. Consequently, if you are a company (or other type of entity) that holds a UK residential property valued at £500,000 or more, you will need to complete an ATED return.

The value originally started as £2,000,000 and dropped to £1,000,000 and has now dropped to £500,000.

Residential properties valued at £500,000 or more as of 1 April 2012, or at date of purchase if later, are liable. The value of the property is used for the five years starting from 1 April 2012. Residential properties needed to be revalued as of 1 April 2017 and if £500,000 or more will fall within the ATED regime from 1 April 2018 onwards.

In most cases there will be no actual tax due, but a return will need to be filed in order to claim relief from the charge and avoid a penalty.

The return is submitted a year in advance and assumes the property will be held for that year ahead. Where the property is disposed of or there has been a change, a further return would need to be submitted to HM Revenue & Customs (HMRC).

So, when do you need to complete an ATED return?

If your company owns a residential property valued at more than £500,000, a return and payment (if required) must be submitted by 30 April in the ATED period. For example, if your company has a property that falls within the limit, the ATED return for the period ended 31 March 2018 would have been due on 30 April 2017.

If your company has acquired a property valued at more

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than £500,000, a return and payment (if required) must be submitted within 30 days of acquisition of the property. For example, if your company purchases a property on 1 June 2017, the return and tax would be due on 1 July 2017, for the period ended 31 March 2018.

If your company has acquired a new build valued at more than £500,000, a return and payment (if required) must be submitted within 90 days of the purchase.

Are you exempt from the ATED tax charge?

In most cases there will be no tax payable even where a return is required. However, if you are required to pay tax, relief is available for: • property rental businesses • property developers • property traders carrying on a property trading business There are also other reliefs available, which are less commonly applied.

It is vital to ensure that your ‘company’ is and does meet the required submission deadlines of the return and if required payment of the tax charge, in order to prevent being penalised by HMRC. If you would like to see if you are liable, please contact Paul Dell with details of any residential properties held or acquired by your company.

Paul Dell 020 8418 2688 paul.dell@raffingers.co.uk

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Introducing A2X Cloud software making life easier for Amazon sellers.

XERO ADD-ON

Find out more at a2xaccounting.com Email: contact@a2xaccounting.com

By providing accurate, automated Amazon settlement accounting, A2X makes it quicker and easier for e-commerce businesses to reconcile their Amazon marketplace sales data.

Businesses selling through Amazon – in the UK or elsewhere – know that accounting for marketplace sales can be a challenge. Amazon provides a large volume of complex transaction data, but not in the form needed to properly reconcile accounts.

For e-commerce accountants and their clients, sifting through this Amazon data can take hours or days every month – with no guarantee of accurate results.

In contrast, with A2X, sellers and their accountants get automatically generated accrual accounting and reconciliation for their Amazon transactions, saving time, improving accuracy, and reducing the potential for costly tax errors.

Accurate, automatic, up to date The data provided by the Amazon Seller Central portal is complex – there are hundreds of transaction types, fees, and taxes to account for. Despite this level of detail, Amazon settlement reports sent to sellers are not linked to monthly financial periods, don’t mesh with most accounting software, and don’t usually include the information needed for accurate accrual accounting.

A2X is the missing link between Amazon and cloud-based accounting – particularly Xero. A2X automatically fetches revenue and fees, aggregates transactions to match financial periods, and transfers this information to the cloud accounting system, enabling sellers or their accountants to reconcile it accurately and easily.

Gain valuable time Without A2X, Amazon sellers and accountants can end up spending hours or even days trying to reconcile transactions. Even relatively small businesses can find it very difficult to manually sort through the information provided.

With A2X automating the Amazon accounting, those hours and days can be spent on more productive work – talking to clients, working on new products, or growing the business.

Reduce errors, avoid issues Accounting accuracy doesn’t just save time – it also reduces potential problems down the line.

Because Amazon merchants often sell in markets all over the world, tax compliance can be complicated.

A2X helps by aggregating VAT and sales tax data and automatically converting currencies. This helps sellers avoid overpaying or underpaying their tax, and avoids problems during tax audits.

Amazon to A2X to Xero For Amazon merchants who use Xero, A2X is quickly becoming an essential software tool.

• A2X is the #1 app for integrating Amazon marketplace sales with Xero.

• Xero selected A2X as App Of The Month in April this year.

• Specialist e-commerce accountants rate A2X the #1 app for Amazon sellers.

Whether you’re an Amazon merchant or an accountant supporting Amazon sellers, A2X can make your life easier.

Your Business Our Passion

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Upcoming Events Register with: lauren.aston@ raffingers.co.uk.

How to Make Your Business More Efficient 18 Jul 2017

6:30pm-8:30pm | WeWork Spitalfields, 1 Primrose St, London EC2A 2EX If you want your business to work smarter and faster, cloud accounting software is a wise investment.

Join us to find out:

• How you can reduce the time you spend on your accounts and bookkeeping • How you can save time by: taking pictures of your receipts, visualising your data, allowing you to spot trends instantly (such as who your best sales person is) and automating many of your admin processes • Why cloud accounting software will be instrumental in making you compliant with Making Tax Digital and to your continued success

Property and Tax Update Autumn 2017

Ealing & Hammersmith This event is for all landlords. Following on from our successful partnership with Winkworth last year, we will be holding another Property and Tax event to update you on: Wear and Tear Allowance, SDLT, Loan Interest and the benefits of Incorporation and Management Companies.

We will also use this event as an opportunity to provide guidance on Making Tax Digital, which will affect landlords and how you report your rental income in the next few years.

New Service Launch 23 Nov 2017

6:30pm-8:30pm | WeWork Spitalfields, 1 Primrose St, London EC2A 2EX Join us for the launch of two new services that can help you:

• System Improvement - as businesses grow they often become overburdened and inefficient processes begin to creep in. To ensure you are running the most efficient business possible we will review all of your processes and suggest improvements to make them more effective • Masters in Business Advancement (MBA) - For start-ups and high growth businesses we give you the opportunity to attend our MBA programme. A twelve month course composed of monthly meetings, which guide you through all of the essential topics needed for business success, including marketing, finance and time management. Through case studies and guest speakers we will give you and your team the tools to run a highly successful and growing business

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Registered Charity Number: 1171885

Charity Ball 2017 Saturday 16 September | 6:30pm-12am | Black Tie Waltham Abbey Marriott, EN9 3LX Tickets: £75pp or table of 10 for £700 Sponsorship Options: Charity Ball Brochure

£75 half page advertisement £100 full page advertisement - 9 LEFT £150 back page advertisement - SOLD £125 inside front cover advertisement - SOLD £125 inside back cover advertisement - SOLD

Raffle/ Auction

We are in need of Raffle and auction prizes. Anyone who donates a prize will be mentioned in our Charity Ball brochure given out to all 200 attendees.

Raised so far

To sponsor our Charity Ball or to book your tickets contact lauren.aston@raffingers.co.uk.

Raising Funds For:

Your Business Our Passion

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8LEGS Technology A client lead generation tool for the recruitment industry CLIENT NEWS

Recruitment Tech company 8LEGS Technology Ltd launched its state-of-the-art service at the beginning of 2017 in response to what it sees as a growing market need.

“The global recruitment industry grew by 8.6% in 2016 and in the UK alone is now worth over £35 billion,” explains 8LEGS CEO Mark Lennard. “Competition for new business is fierce. Our lead generation technology helps recruitment agencies to stay ahead of the game by rapidly locating the job leads that are relevant to their sector”.

8LEGS offers a Boolean search feature via its public database. It continually monitors in excess of 13 million unique URLs to locate and index company job pages and in turn delivering thousands of job leads for recruiters via its searches. Its cutting edge technology then revisits the domain every 24 hours ensuring all job leads are live and up-to-date.

“With over 20 years of experience in the recruitment industry, we understand the challenges faced by today’s recruiters. They are constantly under pressure to exceed their targets and place more candidates,” continues Lennard. “8LEGS provides a shortcut for them to achieve that and make more placements and generate more revenue, by finding job leads they never knew existed. Our users are able to create searches for job leads exactly as they would search for candidates”.

8LEGS offers a flexible, scalable service comprising three plans: Basic, Premium and Enterprise.

Key features include:• Full Boolean searching to allow the creation of complex search strings • Job leads are identified based on textual content and geographical location

Find hidden roles from existing client data you never knew existed.

• A bold search facility allows users to carry out searches for specific words and phrases displayed on company careers sites in bold font (such as job titles) • Historical data searching • Saved search alerts • Email Finder and Send Functionality Both the Premium and Enterprise plans allow users to upload their own data from their recruitment CRM allowing the recruiter to search on their own niche sector and find hidden roles from existing client data that they would have never known existed.

Prior to its launch, the company carried out rigorous beta testing on its technology for several months to create a proven system.

“It’s easy to use, it helps recruiters to boost their sales performance and it places more focus on business development,” observes Lennard.

At present, the company generates job leads in the UK, USA, Canada and Australia. Additional countries are being added on a regular basis.

“8LEGS is the first comprehensive global lead generation tool,” concludes Lennard. “It’s a game changer for the recruitment industry”.

Further information on 8LEGS can be found at www.8legs.com or by calling 020 3800 0800.

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What Data can I use, Share or Keep?

With information rights at the top of the government’s agenda, do you know if your company adheres to the law?

The Data Protection Act is the main piece of legislation which governs the way personal information is used by businesses. The act safeguards two main forms of ‘personal data’ - data stored digitally and data that forms part of a ‘relevant filing system’.

So, What Data Can I Use? Many have the misconception that because information may have been given to a party, that they have the right to use it. The government has released a code of practice which you should abide by when dealing with data:

• All data is fairly and lawfully processed • You have a legitimate reason for processing the data and have obtained the data for one or more specified purposes • You do not hold more personal information than you need for your purpose • Data is accurate and kept up-to-date • Data is not kept for longer than necessary • You ensure that the rights of the individual whose data has been collected is respected and abided by • Data is kept securely and protected from loss, destruction and damage • Data is not shared outside of the EEA unless that country ensures an adequate level of protection Therefore, when collecting information, it is important you specify:

• What their personal information is being used for • What marketing and mailing lists they are being subscribed to • Whether their information will be shared with third parties

What Data Can I Keep?

You do not have to make the party aware that you will be keeping the data, however you will need to make them aware of the use of the data. If, however, the data has a time stamp, it is important that you do not use the data after this time.

Sanctions The ICO have the power to sanction businesses who fail to comply with legislation. Regulatory action can include; criminal prosecution, civil monetary penalties, non-criminal enforcement and, in some circumstances, an audit. ­­

Employee Spotlight In this slot we introduce you to a valued member of our team, allowing you to put a face to a name. This quarter we speak to our Cloud Management Accountant, Imran Shahzad.

Name: Imran Shahzad Email: imran.shahzad@raffingers.co.uk Career: I was working in retail when one day me and my friend were discussing where we both see ourselves in 10 years’ time.

This discussion got me thinking and shortly after I took on a voluntary position at a local accountancy firm. After only working there for three days voluntary, they offered me a full time paid position. This gave me confidence, as I thought I must have some kind of talent, and I started my ACCA qualification.

After working at the practice for a few years, to further my experience I moved to Raffingers in 2016 as a Cloud Management Accountant where I am helping clients with their reporting and showing them how they can access more from their finances. I still have four ACCA professional exams to complete which I am hoping to achieve by March 2018.

Interests: I have a soft spot for Chelsea and enjoy watching cricket. I also like to keep myself active and regularly hit the gym.

I would love to travel more and am hoping to visit Australia at the end of 2017.

Partners Report: Imran has been a pleasure to work with since he started and has delivered a huge amount of support to our clients using Xero. He is our management accountant guru and has got to grips with our new forecasting tool, which helps clients manage their finances in a systematic way.

Your Business Our Passion

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BLOG

Thought About Investing in Your Own Company?

Blog by Lee Manning, Partner Investing in your own company is an option many business owners choose to take, not only because it saves on their business costs, but it can generate tax-efficient income too. However, with the future unknown, choosing to invest is always a risk and a decision that should not be taken lightly.

Before you begin…

Is your business profitable? This may seem obvious, but it is surprising how many business owners do not know how profitable their business is. It is important you understand what is and is not working in your business before you even think about investing.

Once you are clear on your business’ position you can then begin to think about whether investing will be beneficial for you and your company.

Ways to invest There are several ways you can look at investing in your company: • Through savings in one lump sum • Re-mortgaging • Private borrowing However, the one I will look at here is a little more uncommon.

Investing via your personal savings Lending your company money via your savings account benefits both you and your company. This is because if your company is borrowing or plans to borrow in the future, annual interest for an arranged overdraft starts at around 5% for low risk companies, but for small businesses, especially start-ups, the rate can easily be double that. In addition to these costs you need to take into account arrangement fees and bank charges, which easily add up.

Therefore, instead of your company borrowing from a bank, what if it borrowed from you? It is possible to set up your savings account as an overdraft facility for your business. This means you can then charge your company interest which can be equal to the total of bank charges, and so long as the amount is similar, 14

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Instead of your company borrowing from a bank, what if it borrowed from you?

HM Revenue & Customs (HMRC) will not object to the arrangement.

How this works For tax purposes you will enter into a “loan relationship” with your company. The interest you charge will not be directly deductible from its profits, which does limit the situations when interest can be deducted, but as long as your company makes a taxable profit there is no problem. It also means that instead of your company paying interest to a bank, it pays that interest to you, whilst saving corporation tax (CT) on the interest it pays.

The interest you then receive is classed as savings income and taxed the same way as interest paid by a bank. This means it qualifies for the savings zero rate band (savings allowance (SA)) of £500 for higher rate taxpayers and £1,000 for basic rate payers. If you are not currently using all of your SA, then lending to your company will be especially tax efficient. Even if you fully use your SA, the tax efficiency is better than that of dividends.

It may also be possible to take advantage of the 0% starting rate of tax that can apply to savings income of up to £5,000. This rate can only be obtained when “non-savings” income, such as salary, pensions, rental income etc. is within strict limits.

Lee Manning 020 8418 2662 lee.manning@raffingers.co.uk

Tax From the Trenches | Neill Staff

“It’s not right and it’s not fair…..”

It would be tempting to go for the immediate joke made semi-famous by Spike Milligan. “It’s not right and it’s not fair” Response; “What’s not right and not fair?” Answer; Joe Louis’s left leg. It’s moderately funny to those who have a Spike’s sense of humour and, more importantly, know that Joe Louis was a famous black boxer, but I digress. The statement came from a highly agitated and emotional client who had just received a series of assessments totalling £340,000 from HM Revenue & Customs (HMRC) based on “perceived shortfalls” in her income. Having worked alongside the client for around two years now I had to agree that the assessments, and the Inspector’s approach, was indeed not right and very unfair.

When setting out on my blog writing escapade, I decided at an early stage that I wouldn’t use the articles to sound off at HMRC for all its mistakes.

For anyone who berates the tax enquiry system, let me question where we would be without it. Most people don’t like paying tax, even if we can see the greater good and hope that the politicians spend it wisely. Without the knowledge the tax system is being policed effectively, I wonder just how many people could be trusted to make an accurate return of their income. Admittedly, as a former tax inspector my views might be a little biased, but so long as HMRC use their powers reasonably, and concentrate their efforts in the right area, then I have no problem.

But therein lays the rub. What happens when a taxpayer comes under an oppressive degree of scrutiny by an Inspector who simply can’t seem to understand what is being presented to them and is unable to perceive a result to their case that is anything other than tax fraud. The answer is a very upset client, the issue of discovery enquiries and assessments, questions dating back over many years without any reasonable basis of discovery and a cavalier approach not seen since the charge of the light brigade.

My client’s sin in this matter, for indeed there is an element of sin, was that she allowed her company’s affairs to fall behind. She was also late in submitting a few years tax returns and paying corporation tax. In the middle of this period she acquired a number of properties without the visible means to do so. Given

that HMRC effectively has a direct link into Land Registry transactions, it was almost a forgone certainty that HMRC would enquire at some stage. Enquire they did, with notices into in-date Self Assessment years and the most recent in-date company accounts.

As part of the enquiry process, we prepared a report of the client’s taxable and non-taxable income over a number of years showing how the client had sufficient income to acquire the properties. We also worked with the client to bring her tax returns, P11d’s and the company’s accounts up to date. The client paid the outstanding corporation tax and late payment penalties, and joined the prestigious “Up to date with everything” tax club. Or so she thought. Our fiend the Inspector was not ready to go away just yet.

Now, if there is anyone reading this who is technically minded in terms of tax, you will already be shaking your head and thinking in terms of the time limits for normal enquiries, discovery provisions, and behaviours in terms of how this affects the earlier years assessments. These thoughts struck me too, to the point that they have been pointed out to the HMRC Inspector on several occasions now. None of the letters have received a meaningful response.

So how do you deal with a case like this, where the case office has seemingly lost all sense of objectivity?

Well the first step is to get the decision to raise assessments independently reviewed by an officer not connected with the case. We have requested a review and have prepared a list of the technical and legal deficiencies in the case as we see them, together with a list of the technical issues that we believe need to be addressed. If the matter is not resolved by review, the next stage will be to submit the case directly to the Board of HMRC as an official complaint and claim for compensation. These aren’t actions that are taken lightly, in fact it’s something I hate doing, but lest we forget that taxpayers have rights too. I’ll keep you updated as things progress in the coming months.

Neill Staff 0208 418 2671 neill.staff@raffingers.co.uk

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