Should your accountant be with you when visited by HMRC?

Is it necessary to have your advisers attend your VAT compliance visit when HMRC decide to darken your door?

Of course, I should declare an interest at this point – when I say adviser, I mean someone like me and that does in most cases have a cost implication for you. So, I guess the real question should be “is having your accountant with you when visited by HMRC cost effective?”

Like so many of the questions we are asked, there is no straightforward yes or no answer.  There are some factors to consider:

  • How routine is the visit? Has it been triggered by some particular transaction, maybe an unusual refund claim or a spike in the numbers?
  • How confident do you feel that you and your team can deal with any questions particularly technical ones?
  • Is your adviser available by phone if needed on the day?
  • Are you insured? Some clients will have tax investigation insurance cover which will pay their adviser to deal with tax enquiries of any sort.  Some of these covers, our own one for instance, will include payment for attendance at routine compliance checks (though many will not).  If you are insured, then there are likely to be no cost implications.
  • Are you and/or your staff well briefed on what to expect at the meeting?

As I say, except perhaps where you are covered by your insurance, there really is no right or wrong answer to this but in recent weeks I was asked to attend by a client and in light of what transpired on the day, I think we were all grateful that I was.

In this particular case, the visit was triggered by an unusual and substantial VAT refund claim.  This was part of a complex series of property transactions where the VAT treatment was admittedly contentious.  We had tried to engage with HMRC in advance of the transaction to agree the correct treatment with them but this had proven to be a fruitless exercise of being passed around various HMRC offices with none of them willing to make a decision.

The visit started routinely enough – the officer had a cup of tea, discussed the issues seeming to be well briefed and proceeded to look at the records.  An hour into the visit he looked up and told us that he was unable to agree the refund and that our claim would be rejected.  He proceeded to set out his own technical analysis of the reasons for the rejection and why my client was looking at being significantly out of pocket.

At every level his analysis of the circumstances was factually incorrect but of course in no way was the client himself in any position to argue this, the issues being complex and governed by a multitude of rules.  Because I was in situ and set out the position in the room, the HMRC officer was forced to admit that he wasn’t a specialist, didn’t properly understand the detailed rules and would have to consult with his office and revert to us.  In the circumstances we asked if he could expedite those discussions.

That afternoon we received an email from the officer acknowledging his error and agreeing to repay the VAT claim in full.  Honestly, I suspect had I not been there we would still have been able to rescue the situation, but it may have taken several weeks of correspondence and a great deal of stress to the client meanwhile.  Being there meant it was sorted more or less immediately.  Given the amount involved I suspect my fee is less than the additional interest payments that would have resulted from the delays!

HMRC investigations are time consuming, stressful and costly. Investigations can last for many months. During this time you will incur additional accountancy fees as well as having to deal with inevitable distruption or uncertainty. These fees will still be due regardless of the outcome and dealing with HMRC on your own makes matters worse.

Protect yourself, get peace of mind. 

If HMRC are investigating your tax returns we can help you take away the stress. The best defence to an HMRC investigation is to engage professional representation from your accountant from the outset. The service will safeguard you from the cost of the accountancy fees associated with a tax investigation giving you peace of mind. 

How the tax investigation service works:

In the unfortunate event that you are selected for investigation, you can relax safe in the knowledge that there will be no additionally accountancy fees to pay. Our service provides professional representation for up to £100,000 of fees relating to your investigation.

  • We have the expertise and experience to deal with HMRC on your behalf
  • Early intervention can lead to early resolution
  • Additional tax due can be avoided or mitigated

For any more questions on the above please contact Barry.Soraff@Raffingers.co.uk, or call us on 020 8551 7200.