James Bailey is predictably sceptical about a new initiative from HMRC.
One of my clients recently received a letter from a new HMRC department calling itself ‘Mid-size Business’. The letter (signed by a lady who described herself as a Chartered Accountant and a Chartered Tax Adviser) explained that my client was being invited to take part in ‘a new HMRC pilot scheme to support mid-size businesses’.
Help from HMRC!
The purpose of this scheme, according to the letter, is ‘to make sure you are getting the help and support you need’. Given that I consider that to be my role as my client’s tax adviser, this raised an eyebrow, but I read on.
The scheme offers ‘a named contact who will co-ordinate a team within HMRC to help you’, and promises to ‘highlight the key tax incentives and specialist tax reliefs that might be available to your business’ together with ‘giving you specialist and technical tax guidance’.
At this point, I became suspicious and checked the date on the letter, which was 26 March 2015, not 1 April! Thanks to HMRC’s poor online security that leads to them emailing letters as unprotected Word documents, I have seen some amusing hoaxes perpetrated using what appears to be HMRC letterhead, but this seemed to be a genuine letter.
Breaking the mould?
The letter is culturally interesting to me, because it involves two fundamental principles that were drummed into me when I was a humble trainee tax inspector. The letter turns one of these principles on its head, but I fear it is a subtle way of promoting the other.
The first principle was: Never give tax advice.
There are good reasons for this where tax inspectors are concerned. Although there is a wealth of case law debating the matter, in certain circumstances a taxpayer can rely on advice he is given by HMRC, even if it turns out to be wrong. In most cases, however, if you follow wrong advice from HMRC and get your tax wrong as a result, you will have great difficulty proving that the advice was given in the first place, and even more difficulty in arguing that you are entitled to rely on it.
The second principle was: Try to separate the taxpayer from his accountant (this is a direct quote from a manual on how to conduct an interview with a taxpayer – to the best of my recollection because I no longer have access to it since leaving HMRC).
It is this aspect that I find even more worrying than the prospect of HMRC giving tax advice. The relationship between HMRC and accountants and tax advisers can be rather fraught, with both sides tending to think the worst of the other.
The letter was copied to our firm ‘for information’, according to its last sentence, but it nevertheless seems to me to contradict the eighth pledge in the Taxpayers’ Charter, which promises that HMRC will ‘accept that someone else can represent you’. It certainly seems to presuppose that the accountant is not already advising the client about tax reliefs and incentives, and not giving ‘specialist and technical tax guidance’.
I am sorry if I appear to be unpleasantly cynical about HMRC trying to ‘help’ businesses. The chap looking down from the walls of ancient Troy who thought no good would come from that big wooden horse the Greeks had left outside the gates was probably also told he was being unduly cynical!
Practical Tip:
If you receive one of these letters inviting you to a meeting with HMRC, what should you do? There is probably no harm in accepting the invitation, but do not hold the meeting on your premises, be very careful in what you say, and take your accountant with you!
