Check the basics
HMRC have recently published their 2020/21 annual report and accounts. It’s a substantial report but my attention was caught by the results of HMRC’s own review of settled cases. They check a sample of cases each year to “test whether we have met our own case quality standards and governed decisions relating to disputes correctly “.
So this is a check by HMRC to see if there cases were settled in accordance with the rules. Remarkably 64% of the cases checked failed the test! More than half did not comply with internal or legal guidance. (See pages 154 and 155 of the report).
Having worked for HMRC for more than 20 years I am only too aware of how complex tax legislation is. I have for some time been concerned that a lack of resource has prevented HMRC from giving their staff adequate training. This manifests itself in increasingly frequent errors on the part of HMRC:
- Invalid enquiry notices are issued,
- Information demanded which HMRC has no legal right to demand,
- Assessments (closure notices) issued without any supporting evidence,
- Penalties sought way in excess of those legally due.
In a recent case a client was about to spend considerable resource on defending himself against an enquiry into his latest tax return. A review revealed that HMRC had in fact missed the time limit for such an enquiry and the matter was therefore closed.
Whenever I take on a new client my first task is to review the correspondence issued by HMRC to check for legal and administrative errors. I find them with increasing regularity. It seems HMRC themselves find them too! Unless or until more resource is provided to HMRC to properly equip their staff to do the job this will be a recurring feature of any interaction with the department. Assuming the letter from HMRC is correct is unwise.
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