HMRC – Business as Usual?

Posted On: 02 Apr 2020

Our Head of Tax Investigations and Disputes practice, Amit Puri, has been keeping his ears close to the ground during the coronavirus outbreak, trying to understand what moves HMRC are making in order to best inform Lancaster Knox’s clients.

What is the current state of play?

From his previous experience of working with HMRC in times of a downturn or crisis, HMRC tends to suspend or slow down formal debt collection action because a) it’s fairly aggressive in nature and b) is usually not what most of the taxpaying public need at that time.

Of course, we understand that complex business enquiries and investigations must continue in some way, otherwise clients will be even further from much needed conclusions. But equally, neither party can expect to negotiate and secure financial settlements as swiftly, in the absence of open lines of communication. Though, the latter is extremely important for the government, especially when the public spending purse has been torn apart by the Coronavirus pandemic.

It is important here to note that various people have commented online regarding the state of play, but most of what we are seeing appears to be coming from those individuals’ own experiences of certain inspectors and particular teams only. To date there are over 55,000* staff still employed within HMRC, with the vast majority employed within their Customer Compliance Group (CCG). To date though, there appears to be no single uniform policy.

Most tax disputes and investigations practitioners will recognise many of the constituent units within CCG:

  • Fraud Investigation Service (FIS)
  • Wealthy and Mid-sized Business Compliance (WMBC)
  • Large Business
  • Individuals and Small Business Compliance (ISBC)
  • Counter Avoidance

Plus, we know, there are various large teams spread around the country, within these directorates.

Temporary Pause?

From recent discussions with industry colleagues and from our own interactions, we have learned that there was (and still remains in operation) a ‘temporary pause’ on compliance activity. However, no formal notice of this has been issued, owing to the fact that HMRC are continuing to review things as the situation unfolds.

The resounding comments though, were that new enquiries and investigations were being stalled, to ease pressure on clients and their businesses during these already difficult times. But, existing compliance interventions are still progressing. In practice, we have witnessed that almost all inspectors we are working with are asking whether they should continue as normal, slow down or stop to accommodate our clients’ needs – which is most helpful.

Given that it seems to be more of a week by week approach currently, within their different business units and directorates, it’s clear we are some way away from a uniformed approach. That being the case, we will continue to liaise with HMRC on a case by case basis, and hope that they continue to exercise a common sense approach during this unusual, uncertain period of lockdown.

Industry Commentators

As confirmed by the Tax Investigations Practitioners Group (TIPG) too, HMRC are raising formal tax and penalty assessments wherever that looks necessary to protect their own strategic assessing positions. In practice, that will be action on their part as we are very close to the personal tax year end date and this will continue for those with business accounting period end dates.

Conclusion

In theory, the only new business enquiries and entrepreneurs’ investigations that could potentially be opened, are those whereby the strict, formal ‘enquiry windows’ would otherwise look to expire, and where the potential risks in those cases are too great to let them subside quietly.

As always, please don’t hesitate to get in touch if more clarity and assistance is required.  In the meantime, please stay safe and do only travel if absolutely necessary!

 

*   Denotes figures as at September 2019, https://www.instituteforgovernment.org.uk/explainers/civil-service-staff-numbers