I’ve had a trawl through a variety of publications, HMRC publicly available documents, ICAEW Tax Faculty guidance and parroted material (behind the walled garden – sorry) on the new style ‘interventions.’ Nowhere in any of the commentary do I see anyone advocating a ‘Just say no’ response. Neither do I see anyone looking at preventative measures aimed at protecting the client portfolio. This is plain madness. that’s despite the Tax Faculty expressing a series of well-reasoned misgivings in relation to the ongoing tax modernisation debate.
There’s little doubt the so-called informal review – especially the Real time health check – is fraught with danger, despite what was recently said in a consultative committee meeting where it was noted that:
HMRC said that new, quicker interventions would mean that a penalty position would be less likely to be reached, particularly for direct taxes where the intervention may be ahead of the return being submitted. The department’s best interests were not in imposing and collecting a large number of penalties, but rather with preventing people from incurring them in the first place.
The fog surrounding these reviews would seem to contradict that statement. I am equally aware that this is all part of an important ongoing review into how HMRC develops a system that fairly polices the tax system.
I am of the view that if your client is adamant there’s nothing to hide then let HMRC waste all the time they want. I would also recommend making professional involvement non-chargeable within an agreed range rather than relying on client insurance measures that keep the fee funnel stoked. If you’re a client advocate, then demonstrate it in the most potent manner.
ICAEW’s advice to check out PII is a classic case of butt covering, providing zero client confidence with nothing to lose at the professional end of things. I know what I’m saying is radical but hey, that’s what readers here expect. But I also see this as an opportunity.
The profession agonises over client relationships yet the tools exist by which professionals can monitor clients’ record keeping. My favourite example is Goodman Jones – but it would be as they are an indirect client of mine. Even so. I’ve spent enough time with their partners to be confident they’re on the right track.
I accept there is a genuine certainty problem in cash businesses but there is no reason why professionals can’t take modern technology and compile their own stats on gross profit margin and other major associated costs so they have something with which to to go into bat. At worst you could use a spreadsheet but a wiki would do nicely because in a wiki you can add context to results. Check out what Jeff Nolan is saying about SocialText and wikiCalc. Then think about collaborating with your professional colleagues. Or would that be too much to ask?
But is there an argument for just saying no? Since these interventions are voluntary but with none of the legal safeguards attached to formal investigations, I think the answer is yes. This is because the logic on which these interventions are based in fundamentally flawed. You can readily posit they amount to fishing expeditions by the back door. I’ve never subscribed to the BOGU* school of practice tax compliance management, yet no-one seems keen to fight the clients’ corner.
HMRC say selection is based on risk factors but are not revealing details or exactly how the selection process operates other than in vague terms. Experienced professionals should know which of their clients are most at risk and at least be honest enough to explain the steps they need to take. But until the guessing game element is removed, clients and professionals are at a real disadvantage in understanding what’s going on.
And that’s before we have any discussion around the competency of those tasked to perform the interventions.
The Tax Faculty wants your views so email: jane.moore@icaew.co.uk if you feel sufficiently incensed.
*BOGU – Bend Over and Grease Up (you’re about to get shafted)
Technorati Tags: HMRC, SocialText, tax avoidance, tax investigations, wikicalc
