A tax return enquiry by HMRC is a possibility for virtually any person who files a return. A common feature of tax return enquiries (especially for business owners) is that HMRC often request a meeting with the taxpayer, particularly at an early point in the enquiry.
The prospect of a meeting with HMRC is generally not relished by taxpayers (or their professional advisers; for the purposes of this article it is assumed that the taxpayer has an adviser). In fact, some individuals (even those whose returns are clearly complete and correct) find meetings stressful and intimidating. However, taxpayers are not normally obliged to attend meetings in tax return enquiries (although criminal investigations are a different matter).
The question therefore arises whether the taxpayer (and adviser) should accept an HMRC invitation to attend a meeting.
HMRC’s approach to meetings in enquiries is set out in its Enquiry manual. Its guidance states:
‘Meetings with the taxpayer are a vital part of any enquiry work. Correspondence or meetings with the accountant are not normally an adequate substitute. The best way to get the facts about a business and the proprietor’s or director’s private affairs is face to face’(EM1822).
However, HMRC acknowledges that a meeting with the taxpayer’s bookkeeper or accountant may enable issues to be resolved in some cases without troubling the taxpayer (EM1821). This may be particularly relevant where the HMRC enquiry is focussed on the breakdown of figures in accounts and on reconciling the taxpayer’s records with those figures.
As indicated above, meetings with HMRC are not everyone’s cup of tea. HMRC is aware of this and has published guidance for its officers about overcoming objections from taxpayers and agents to attending meetings (see EM1861). This states that HMRC officers can reduce or overcome resistance to a meeting by (for example) ‘explaining that meetings can actually reduce the costs and length of an enquiry, because so much more can be covered at a meeting than in protracted correspondence.’
However, HMRC accepts that a meeting should never be requested unless it is necessary, as meetings can be costly in terms of the taxpayer’s lost work time, and possibly professional fees as well (EM1860). If the taxpayer does not wish to attend a meeting for any reason, it should be emphasised to HMRC that full cooperation will be given in correspondence. This may be helpful if it becomes necessary to negotiate an appropriate level of penalty for any errors in the tax return.
What’s on the agenda?
In my experience, a meeting between HMRC and the taxpayer’s professional adviser is generally a good move, as already explained.
Furthermore, meetings with the taxpayer present will often be sensible, but only if there are good reasons (eg the taxpayer is the most appropriate person to deal with the non-accounting issues in the enquiry), and he or she is comfortable attending a meeting with HMRC.
However, it is recommended that a detailed agenda is obtained of what HMRC intends to cover at the meeting. HMRC’s guidance (at EM1827) confirms that an agenda covering the main areas for discussion should always be provided, but in practice this does not always happen without being asked.
HMRC officers will often provide a broad agenda, but it is important to obtain a detailed agenda if possible. This should allow the taxpayer and adviser to prepare properly for the meeting, which is crucial.
If a meeting is agreed, where should it be held? In my view, meetings should normally be held at the professional adviser’s office (for example, because these will often be comfortably familiar surroundings for the taxpayer), or alternatively at HMRC’s offices. However, HMRC generally prefers meetings to be held at the taxpayer’s business premises (or the accountant’s office), on the basis that it will normally be easier to examine the business records there (EM1830).
It should be noted that HMRC has formal powers to inspect business premises, if the inspection is reasonably required for the purpose of checking the person’s tax position (FA 2008, Sch 36, para 10). However, this does not necessarily mean that a meeting must be held at the business premises; HMRC generally has no right to insist on the business premises being the venue for the meeting.
HMRC will normally takes notes at the meeting (very often a second HMRC officer will attend to take notes) and send a final version to the taxpayer or adviser afterwards.
The HMRC officer will sometimes ask for the notes to be agreed and signed. However, in my view the notes should not be signed, and should be reviewed thoroughly before any comment is made on them.
Practitioners should ask a colleague to attend the meeting and concentrate on writing detailed notes. The practitioner’s notes can then be used as a basis for pointing out errors in the recollection of the HMRC officer.
It is most important to correct any factual errors or omissions in HMRC’s notes. This is because (among other things) HMRC may seek to rely upon them if the enquiry becomes contentious (Duffy v Revenue and Customs Comrs  SpC 596).
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