Tax expert busts myths surrounding the impact of coronavirus on tax investigations

After spotting a number of misleading news stories about the impact of the current coronavirus pandemic on tax investigations and enquiries, one of the UK’s leading tax experts has been attempting to separate fact from fiction so that businesses and individuals know exactly where they stand.

Howdenshire-based Gary Brothers is the Managing Partner of Independent Tax, which is the largest HMRC-handling and tax dispute specialist in the North of England and has its headquarters at Brackenholme.

He explained: “In recent weeks, I’ve read media coverage suggesting that HM Revenue & Customs is stopping all investigations and enquiries due to coronavirus. However, this is only partially true, so I think it’s important to separate fact from fiction.”

Gary, who is pictured (centre) with some of his colleagues, revealed: “Between late March and mid-April, HMRC wrote to customers who are the subject of a tax enquiry or investigation, along with their advisors, to inform them that they would be suspending those enquiries or investigations. This was to allow those customers to deal with the ongoing uncertainty caused by the coronavirus pandemic and to avoid adding to the worry or burden they were facing. Of course, it also helped HMRC, which lost frontline staff due to the need for some people to self-isolate and also had to redeploy many thousands of staff to emergency coronavirus-related roles, such as the furlough wages scheme.

“It’s important to note that HMRC is only ‘suspending’ investigations and enquiries. The letters that people will have received included a very standard form of words and were issued by the thousand.”

Gary also highlighted the fact that, rather confusingly, HMRC’s own policy documents suggest that they will NOT suspend enquiries but will continue where they need to tackle ‘the most serious criminal cases’ or ‘those exploiting the crisis to promote tax avoidance.’

He explained: “It appears that HMRC’s original plan was to suspend enquiries until the end of April and then resume business as usual. However, with a further three-week lockdown announced by Government, it’s widely expected that HMRC will extend the suspension period until the end of May.”

Gary pointed out that the letters sent to customers also state that HMRC will continue with enquiries or investigations in cases where the customer, or their advisor, contacts them to say that they do not wish to suspend matters, explaining: “This is an aspect of the story that has not been widely reported by the media, yet around 70 per cent of our clients have said that they wish to continue with their enquiries or investigations.  Many people feel that facing an HMRC investigation is bad enough without the added pressure of the uncertainty caused by the coronavirus pandemic. Therefore, most of our clients would like to try to resolve their HMRC matter as soon as is practicable.”

Gary fears that the inevitable confusion prompted by some of the media coverage he’s seen could have led some businesses and individuals facing an investigation or enquiry to assume that it will simply ‘go away’.

He said: “Sadly, this is the stuff of fantasy and definitely a bust-able myth! It’s important that people understand that enquiries and investigations are only suspended temporarily, but also that customers subject to an enquiry or investigation can request that HMRC continue with it if they wish to.

“For those customers who agree to suspension for now, there is absolutely no indication that HMRC will simply drop that enquiry or investigation and walk away without concluding it. For a long time now, HMRC has had very little discretion to do ‘deals’ or walk away from what they consider to be the correct level of tax due and there is no indication that this scenario will change post-coronavirus.”

“As a business specialising in HMRC investigations and enquiries, during the last four weeks Independent Tax has had contact with more than 100 senior HMRC investigators and not one of them has indicated that the suspension is anything other than that.”

Gary added: “In fact, there has been speculation that HMRC’s investigators will be even more active post-coronavirus as the Government looks to re-fill its coffers. So, I’m afraid that’s another myth firmly busted; there is no indication that HMRC will quietly drop investigations and enquiries due to the coronavirus pandemic.”

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