Mark McLaughlin considers how taxpayers might respond to a request by HMRC for a meeting during a tax return enquiry.
Tax return enquiries from HM Revenue and Customs (HMRC) are an ‘occupational hazard’ for those who file self-assessment returns. It is not uncommon for HMRC to request a meeting with taxpayers during a tax return enquiry. This is particularly the case for individuals with complex tax affairs, and self-employed taxpayers.
Should I stay or should I go?
There is generally no obligation to attend a meeting at HMRC’s request (although criminal investigations are another matter). However, that does not necessarily mean that taxpayers should refuse meeting invitations – in some cases, meetings can be helpful.
For example, a meeting might avoid misunderstandings and prevent protracted correspondence. This could significantly reduce the length of HMRC’s enquiry and save professional fees (assuming that the taxpayer is professionally represented).
Keep calm and carry on…
However, it is important that the taxpayer (or adviser) has a degree of control over the format and conduct of the meeting. Some practical points to consider in connection with meetings include the following:
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Agenda – Make sure HMRC provides a detailed agenda in advance of the meeting and ensure that the HMRC officer does not unnecessarily stray outside it.
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Meeting venue – Choose this carefully. A ‘neutral’ venue such as the adviser’s office might be more comfortable and familiar territory for the taxpayer than HMRC’s offices. Meetings at the taxpayer’s business premises should generally be avoided, unless there is a good reason for holding a meeting there.
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Take notes – Detailed notes of the meeting should help to avoid any disagreement later about what was said. If possible, the taxpayer (or adviser) should bring someone along to take notes. Those notes should be checked against any notes provided by HMRC, and any errors or omissions highlighted as soon as possible.
Know thine ‘enemy’!
HMRC’s Enquiry Manual (at EM1865) includes tips for its officers when dealing with face-to-face meetings. Key points that may be inferred from these tips include:
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Ensure that the HMRC officer does not ask questions which are unnecessarily private and intrusive (i.e., the taxpayer’s human right to privacy should be respected).
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The HMRC officer might ask seemingly innocuous and general questions initially. Such questions might be intended to put a nervous taxpayer at ease; but they may also be leading to more searching, intrusive and possibly controversial questions. So, stay focussed and mindful – think about the direction and likely purpose of the questions, and don’t be afraid to query their relevance, if necessary.
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There’s nothing wrong in admitting to not knowing the answer to a question; take the question away and answer it later – don’t feel compelled to guess the answer at the meeting. In addition, don’t be afraid of ‘pregnant pauses’ in the HMRC officer’s questions; this may be a deliberate tactic to elicit ‘off-the-cuff’ loose and possibly inaccurate responses.
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Be prepared for questions seeking to establish possible explanations for unidentified receipts (e.g., gambling winnings, inheritances from relatives), if appropriate.
Finally, remember that HMRC officers are civil servants, and that tax return enquiry meetings are not equivalent to police interrogations!
Practical tip
If HMRC asks the taxpayer to sign HMRC notes as being a true and accurate record of the meeting, this request should generally be refused, as it may be difficult to rebut any inaccuracies later (e.g., see Duffy v Revenue and Customs Commissioners [2007] SpC 596).
