Tag: tax disputes

Disclosures

Posted on by Alicia Sprott

A disclosure to HMRC will provide peace of mind and a clean slate going forward – HMRC will provide written acceptance of a disclosure following review, providing the disclosure is complete and correct. The insufficiency of tax must also be rectified, together with late payment interest and penalties in some cases.

A disclosure can be made to HMRC voluntarily or following receipt of a letter or enquiry. Making a voluntary disclosure to HMRC is strongly advised as you will benefit from the lowest possible penalty ranges. Making a timely disclosure will minimise the interest payable, compared to HMRC discovering the error. Making a voluntary disclosure also protects your position from a potentially costly HMRC enquiry. In more serious cases, a disclosure to HMRC can offer protection from criminal prosecution.

HMRC is in receipt of more information than ever before and has been using this information to send ‘nudge’ letters to those they believe have not paid enough tax. If such a letter is received and not responded to, HMRC is likely to open an investigation in the future based on the information it holds, so engaging professional advice and making a disclosure is highly recommended. A disclosure is usually recommended in the HMRC letter.

The disclosure process differs depending on the type of tax being disclosed and the entity to which the disclosure relates. In most cases, the disclosure process is clearly established, with time limits to which us and HMRC must adhere to. We have assisted clients in making various types of disclosures to HMRC, covering all heads of tax, including offshore income and gains, rental income and undisclosed capital gains. We are well placed to guide you through every step of the process in order to reach a successful outcome.

Contact Danielle Ford, Partner and Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.

Negotiating payment plans

Posted on by Alicia Sprott

If you do not inform HMRC, it will commence enforcement action, which can range from calls or visits to your address from HMRC’s Debt Management team, right up to bankruptcy action, in the worst case. In addition, penalties will be applied to the liability.

In order to prevent these outcomes happening, agreeing a payment arrangement with HMRC is recommended. Providing an agreement is reached and adhered to, penalties for late payment will not be applied and enforcement action not taken. A payment arrangement will depend on your circumstances; it may be an ongoing monthly payment until the liability is settled or a more bespoke solution which may involve relatively small initial payments whilst awaiting a property sale or completion of probate to allow the substantial liability to be settled.

We have assisted clients in a range of difficult situations, allowing them to manage challenging cash flow positions, to continue their businesses and to remove the spectre of HMRC’s debt collectors.

It is important to note that late payment interest will apply to any tax liabilities paid late and this cannot be avoided by agreeing a payment arrangement with HMRC. Only payment of the liability can stop further interest accruing.

Contact Danielle Ford, Partner and Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.

HMRC targeting online sellers – Accountancy Daily

Posted on by Alicia Sprott

HMRC is intensifying efforts to ensure tax compliance among online sellers and content creators who use digital platforms such as eBay, Etsy, Airbnb, and Vinted for sales. This move comes as part of a broader initiative to crack down on unreported income from the rapidly growing online marketplace sector.

As of 1 January 2024, digital platforms must collate income details of sellers, with reporting due from January 2025. This requirement stems from the Model Reporting Rules for Digital Platforms, a global initiative spearheaded by the Organisation for Economic Co-operation and Development (OECD), which is aimed at increasing transparency and preventing tax evasion within the digital gig economy.

Despite HMRC’s move towards improving tax compliance for online sellers, the legislation being applied isn’t reflective of modern changes in employment, technology and expense requirements, and some legal precedents being applied date back to the 1980s.

Danielle says: “If you are required to complete tax filings, seeking professional advice is advised. It is particularly crucial as an expert will be able to advise on expenses, potential tax reliefs, and to guide you through the process.”

You can read the article in full on Accountancy Daily here.

Tax compliance for online sellers

We have previously commented on the tax obligations online sellers need to be aware of. In short, it’s best to be prepared and to keep detailed records of your sales and expenses.

For further guidance and advice on the content detailed above, please contact Danielle directly.

Economic crime: recent updates, strategies and implications of non-compliance

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  •  July 10, 2024
     11:00 am - 12:00 pm

The UK has been intensifying its efforts to tackle economic crime, resulting in the ratification of the Economic Crime and Corporate Transparency Act 2023. However, professionals in the field must navigate the latest regulations with confidence to effectively manage risk, ensure compliance, and represent their clients’ interests in disputes related to economic crime. This webinar (more…)

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

Posted on by Alicia Sprott

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.

COP9 and tax investigations – Accountancy Daily

Posted on by Alicia Sprott

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. Danielle and Riocard focus on an overview of the initial stages of the COP9 process, and highlight the importance of the outline disclosure report (ODR) which lays the foundations for a successful outcome. Overall, the process is complex and seeking a professional and expert advisor is strongly recommended – the Chartered Institute of Taxation (CIOT) has written to its members urging those without the necessary experience not to undertake COP9 work, due to difficult positions clients have been placed in by inexperienced advisors.

You can read more in the article on Accountancy Daily (subscription needed).

What to do if you receive a COP9 offer

We have commented in detail on the COP9 process previously – the key takeaway is that you should seek immediate professional advice. The COP9 process is incredibly detailed and can be a time-consuming ordeal as well as being financially and emotionally draining. At haysmacintyre, we have a wealth of experience in dealing with COP9 investigations. We have a proven track record in obtaining favourable results for clients, allowing them to draw a line under the matter and move forward without further intrusion from HMRC.

For further support and advice, get in touch with Danielle or Riocard.

Tax obligations when selling online

Posted on by Alicia Sprott

The details collected will include personally identifiable information on the individual, details of sales proceeds and the number of transactions. Individuals with more than 30 transactions per year will be reported.

For those operating a trade, income must be declared to HMRC. The exception to this is where income is below the trading allowance of £1,000 each year. If your gross income is higher than this, then it must be reported to HMRC.

Upon receipt of the information, HMRC will first undertake a review, comparing the information to tax filings. Any further action will be based on those who have generated income above £1,000, a significant number of transactions, or both. Having said this, HMRC’s review is not always perfect so in some cases we do expect those who may just be selling their old clothes to receive a letter from HMRC.

Following review, we expect HMRC will issue nudge letters to individuals, and in the most egregious cases, issue full enquiries and potentially commence criminal investigations.

The first report from online platforms is due on 31 January 2025. Penalties will be applicable should the digital platform not comply by the due date. Self-employed individuals must submit their income to HMRC on their Self Assessment tax return.

It’s therefore crucial to maintain meticulous records of income received from digital platforms. Any inconsistencies between your Self Assessment tax return and the Model Reporting Rules for Digital Platforms could trigger an investigation by HMRC. This initiative represents HMRC’s latest effort to address non-compliance in the context of the gig economy.

To protect yourself, we recommend keeping a detailed record of your online sales, including all income and expenses such as postage and packaging costs, especially if your sales exceed £1,000 in a year. This will allow you to review your position and respond to HMRC should the need arise.

Even if you are not trading, a letter from HMRC should not be ignored. We have seen HMRC commence enquiries into those who have ignored nudge letters. We strongly recommend seeking professional advice on receipt of a nudge letter, due to the potential penalties involved.

If you need further assistance on the above, or for advice on nudge letter correspondence, contact Danielle Ford, Partner and Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.

How to appeal against tax penalties – Telegraph Money

Posted on by Alicia Sprott

Appealing your case to HMRC

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.

Increasing your chances of appealing and winning starts with following the correct appeal process and asking to postpone tax collection where possible. Danielle says: “It’s especially important to take note of the date on the [HMRC] letter, as this is when the 30-day period starts – not the date you actually receive it.”

Taxpayers should also be thorough and organised when appealing, and scanning documents is vital – if you need to provide relevant documents to other officers in the appeal process, the scanned copies will suffice until the originals are returned. Danielle says: “Take careful note of the dates included on any correspondence from HMRC, and always include your reference number in all communications you send. Always send appeals to HMRC by recorded delivery and retain proof of postage.”

You can read the article in more detail on Telegraph Money (subscription needed).

Get help with your tax disputes case

Appealing to HMRC can be complex and be a financial and emotional drain. Consulting with a tax specialist ensures that your case is effectively presented, increasing your chances of success. Danielle has over 25 years’ experience in managing tax disputes for a wide range of clients across multiple sectors. To find out how we can help you, contact  Danielle, or Riocard Hoye, Senior Manager.

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