Archives: Chartered Accountants

“During these unprecedented and worrying times, financial stability for SME’s is paramount to help to ensure their survival and future success. I commend Delphine Paterson for her wise counsel, knowledge and dedication in guiding us through the myriad of protocols to take advantage of the Coronavirus Business Interruption Loan scheme and future fund.

If you need working capital facilities to help you to bounce back higher, look no further.”

– Ronel Lehmann, Chief Executive at Finito Education Limited

Our Tax Investigations & Dispute Resolutions team assisted a client under a lengthy COP9 investigation successfully appeal assessments and penalties by proving that HMRC’s assertions were invalid. By identifying facts and procedural errors that had previously not been addressed by HMRC, approximately 80% of assessments and penalties that had been raised were withdrawn. This included  the entirety of a ‘Personal Liability Notice’ which was seeking to recover penalties from the director in a personal capacity and could well have caused significant financial distress.

Our client had an ongoing dispute with HMRC in connection with the VAT liabilities of his company’s supplies. The enquiry had been ongoing for a significant amount of time and relationships between their current accountants and HMRC had become strained.

HMRC believed that the client had deliberately understated his company’s Output VAT and had raised VAT assessments and penalties for over £600,000. The HMRC officer knew that the company could not remain solvent with this level of tax due, and so utilised HMRC powers to levy the deliberate penalties on the director personally using a Personal Liability Notice (“PLN”).

At the time of our engagement, although there was an existing appeal against the PLN, the appeal windows for the underlying assessments and penalties had unfortunately expired. However, in an appeal against a PLN, HMRC are required to evidence that the underlying assessments and penalties were valid which provided scope to address issues outside the limited scope of the PLN.

As the investigation had been running for such a length of time, our team performed a detailed and comprehensive review of the complex case history. We identified how HMRC had reached their position and held several discussions with the client to obtain a full understanding of their business. We concluded that a number of personal circumstances, items of documentary evidence, and procedural errors had been overlooked by HMRC in reaching their current position.

We re-established a healthy relationship with HMRC and agreed that the most beneficial way forward was to proceed to an independent review to both protect our client’s position as to time limits and to give us the opportunity to prepare representations for the review officer’s consideration. Our team prepared a substantial document highlighting a number of procedural errors and evidencing that HMRC had not met the burden of proof required to raise the assessments. From analysis of applicable case law, we were confident that an independent review would produce a beneficial result.

The original caseworker reviewed our new arguments prior to the review officer and provided an updated view of his position. We had a small success here with the caseworker offering to reduce the PLN by approximately 20%. It was our belief that this variation remained inadequate and we therefore ensured that our client received the independent review to which he was entitled.

The independent review was found in our client’s favour with the review officer agreeing that the procedural errors were material and meant that the underlying assessments were invalid. With no valid assessment, there could be no penalty and thus no PLN.

Whilst Simmons Gainsford was initially engaged to assist with the appeal against the Personal Liability Notice, we reached a final position above and beyond our engagement, successfully withdrawing 100% of the PLN and 80% of underlying liabilities, saving our client over £440,000 in tax and penalties. The company’s liquidation was finally able to proceed solvently and the remaining assets able to be distributed to the creditors and shareholders.

This case highlights how an HMRC caseworker’s position is not final and certainly not always correct. By acting on our client’s behalf, we were able to manoeuvre around a long-standing dispute, gaining HMRC’s agreement to withdraw the majority of assessments and penalties that had been raised whilst swiftly moving matters to a conclusion.

How can Simmons Gainsford help?

Our team includes many specialists and ex-HMRC personnel. We are able to undertake a review of your specific circumstances and advise on how to navigate through complex HMRC enquiries.

If you require assistance, please do not hesitate to contact the head of our Tax Investigation and Dispute Resolution Team, Anthony Rose on Anthony.rose@sgllp.co.uk or telephone 020 7447 9000.

Our Tax Investigations & Dispute Resolutions team assisted in closing a long-running Inheritance Tax (IHT) enquiry into the Estate of our client’s deceased  mother. By completing a detailed case review and collating a comprehensive response to HMRC, we were quickly able to close the enquiry and displace HMRC’s assertion that up to £300,000 IHT was payable.

A potential client was referred to Simmons Gainsford LLP’s Tax Investigations & Dispute Resolutions Team. The client was the executor of a parent’s Estate had entrusted his family’s lawyer to progress an HMRC Inheritance Tax enquiry, which had been running for over two years prior to our initial discussion. As the investigation had been running for such a period, our client sought specialist advice in order to find a way to move the enquiry to closure.

Following Simmons Gainsford’s engagement, our team conducted a detailed and thorough review of case correspondence and supporting documentation to identify the main areas of dispute.

Whilst the Estate itself did not appear to be complex as the main asset was a sole UK rental property, the HMRC officer was asserting that approximately £300,000 additional Inheritance Tax was payable. The two main issues were the deductibility of a number of loans to the deceased in her final years by her two sons, and the proportion of property ownership chargeable to the deceased.

Once we had a firm understanding of the dispute, we discussed matters with our client in detail to explaining the current position and gain further background. As HMRC had raised a protective charge on the property held by the Estate, the assets were still unable to be distributed.

Our team prepared a comprehensive response to address all open disputes. We identified deficiencies in HMRC’s position and arguments, and provided extensive arguments supported by relevant case law and additional documentary evidence.

Our response addressed and satisfied all risks that the HMRC officer was concerned with. HMRC agreed with the position that we laid out and swiftly closed the enquiry with no additional tax payable by the Estate.

By conducting a detailed review of the matters in hand, working closely with our client, and tailoring a comprehensive response to HMRC, out team was successful in closing a long-standing investigation with a single piece of formal correspondence.

This case highlights how HMRC investigations may sometimes grind to a halt and that a fresh set of expert eyes may help bring matters to a close. It also highlights that HMRC are willing to listen and change their mind on their assertions once detailed arguments and supporting documentation is provided.

Our client was ecstatic with our successful result and that that the assets of the estate could now be distributed following such a long dispute and shared his thoughts, below;

 

“Well done to you and the team, you have our appreciation and highest respect for the efficiency, expertise and professional way the whole matter has been handled.”

 

 How can Simmons Gainsford help?

Our team includes many specialists and ex-HMRC personnel. We are able to undertake a review of your specific circumstances and advise on how to navigate through complex HMRC enquiries.

If you require assistance, please do not hesitate to contact the head of our Tax Investigation and Dispute Resolution Team, Anthony Rose on Anthony.rose@sgllp.co.uk or telephone 020 7447 9000.