Tax Disputes & Resolutions quarterly round up: January-March 2024

Code of Practice 9 and tax investigations

Code of Practice 9 (COP9) is the most serious civil investigation by HMRC. Receiving a COP9 and an offer to disclose under the Contractual Disclosure Facility (CDF), is an extremely serious matter and represents the last civil chance for those who may not have paid the correct amount of tax. Read more in our Accountancy Daily article here.

HMRC liabilities and Time to Pay arrangements

The increase in interest rates and energy bills during 2023 has had a significant impact on cashflow which is making it harder for some taxpayers to settle their liabilities. With this in mind, we took a look at HMRC’s annual report and 2022/23 accounts, which show the increasing need for temporary support of the settlement of tax debts by way of Time to Pay (TTP) arrangements. Read more here.

Property sector remains in HMRC’s crosshairs

Following on from our September 2023 insight, HMRC’s focus on the property sector continues. Their latest ‘One to Many’ property related nudge letters are targeting taxpayers who incorporated their property business during the 2017/18 tax year or claimed for repairs and maintenance on the land and property pages of their 2021/22 Self-Assessment tax return. Read more here.

HMRC and online selling platforms

HMRC is sending nudge letters to those who make money on platforms such as eBay and Vinted. We don’t believe HMRC is targeting those who want to sell things from around the home – it is aimed at those running a business or a side hustle on these platforms. Importantly, trading income does not need to be declared below £1,000. Read more here.

Nudge letters: how HMRC is replacing intelligence-led tax enquiries

HMRC started to formally use ‘nudge’, or ‘one to many’ letters in 2019 and they are now a staple means of communication by HMRC. Nudge letters allow HMRC to generate significant levels of revenue by expending a relatively low level of resource, so we can see why they’re becoming more frequent. Read more here in our article in the London Business Matters magazine, published by the London Chamber of Commerce.

HMRC settlements and closure notices

There are a significant number of old enquiries outstanding with HMRC. We have seen the earnings capacity of a number of taxpayers change significantly based on when the enquiry was first issued compared to where they are now. This can be a cause of concern financially when a HMRC settlement is likely and an anxious time for the taxpayer. It is important to not bury your head in the sand and to address the enquiry and settlement directly. For more, watch our video here, and get in contact with Danielle Ford or Riocard Hoye for further support.

How to appeal against penalties

Danielle has featured in Telegraph Money in an article discussing how to appeal against penalties and get a successful outcome. According to HMRC’s data, only 36% of its initial decisions were upheld during the 2022-23 tax year. The remaining decisions were modified after an internal review (or statutory review) – importantly, taxpayers have the legal right to request this review. Read more here.

Spring Budget 2024: Addressing the tax gap

Following the updates from the Spring Budget 2024, the Chancellor continues to focus measures on closing the tax gap. Measures include investing in HMRC’s ability to manage tax debts, closing the loophole in the Transfer of Assets Abroad (ToAA) legislation, and updating HMRC’s services for self-assessment. Read more here.

You can read all of our previous insights here. If you would like further advice on anything mentioned above, or to discuss your circumstances in more detail, contact Danielle Ford, Partner & Head of Tax Disputes at dford@haysmacintyre.com or Riocard Hoye, Senior Manager at rhoye@haysmacintyre.com.