Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Rcaff
    • By Rcaff 13th Mar 17, 4:58 PM
    • 2Posts
    • 0Thanks
    Rcaff
    HMRC compliance check - personal bank statements
    • #1
    • 13th Mar 17, 4:58 PM
    HMRC compliance check - personal bank statements 13th Mar 17 at 4:58 PM
    Hi all, new to here ! Hoping someone can advise or help...
    I am an employee and always have been, pay tax through PAYE
    back in 2012 I had a brilliant idea to start my own business.....opened up a Ltd company through companies house and thats where it ended....nothing came of it, never opened a business bank account or traded and forgot about it till I got a letter addressed to me as the director, remembered it and promptly closed it with no accounts to file. That was in 2013.
    All during that time, and since, I was working.
    Fast forward to today and I have a letter from HMRC doing a compliance check - they want to know if I ever gained financially from the company.
    Phoned them and told them it was closed with no transactions or activity whatsoever.
    The caseworker then says she needs my personal bank statements for the last 5 years !
    I explain that I have no income other than my pay. I explain that my personal account is held jointly with my husband who is not under the compliance check and does not wish his personal transactions to be seen.
    This seems really intrusive...do HMRC have a statutory right to see my personal bank statements ? surely they can access my PAYE account ? I have never had any other income so why do they suddenly think I do and how do I prove otherwise ? I am only reluctanct to send in the statements because I dont see why they should see what we are spending and on what. This smacks of big brother to me
    Can anyone help? Thanks
Page 1
    • Wayne O Mac
    • By Wayne O Mac 13th Mar 17, 5:53 PM
    • 208 Posts
    • 260 Thanks
    Wayne O Mac
    • #2
    • 13th Mar 17, 5:53 PM
    • #2
    • 13th Mar 17, 5:53 PM
    This seems really intrusive...do HMRC have a statutory right to see my personal bank statements ?
    Originally posted by Rcaff
    They have a right to see any documents 'reasonably required to check your tax position'.

    If they ask for your personal bank statements and you don't think they're required for this, you can refuse. They'll probably then send out a formal notice requiring you to provide them. You can appeal this notice, but if HMRC dig in, you may find yourself having to explain to a judge at tribunal why the statements are not required to check the position.
    • chrismac1
    • By chrismac1 13th Mar 17, 6:38 PM
    • 2,466 Posts
    • 1,456 Thanks
    chrismac1
    • #3
    • 13th Mar 17, 6:38 PM
    • #3
    • 13th Mar 17, 6:38 PM
    The starting point here is whether any of the company transactions went through these bank accounts. If yes you have a problem. if no you can tell HMRC to get lost.
    Hideous Muddles from Right Charlies
    • Rcaff
    • By Rcaff 13th Mar 17, 7:12 PM
    • 2 Posts
    • 0 Thanks
    Rcaff
    • #4
    • 13th Mar 17, 7:12 PM
    • #4
    • 13th Mar 17, 7:12 PM
    thanks for the responses.
    I never actually did anything with the company other than open and close it. I have told them this but they still want to see my personal statements. I am prepared to go to court if I have to.
    I cannot understand if I closed the company in 2013 why on earth they want the last five years worth of statements ?!
    • Darksparkle
    • By Darksparkle 13th Mar 17, 7:28 PM
    • 4,656 Posts
    • 2,941 Thanks
    Darksparkle
    • #5
    • 13th Mar 17, 7:28 PM
    • #5
    • 13th Mar 17, 7:28 PM
    Do you do self assessment for any reason? Expenses, interest, property etc?
    • polymaff
    • By polymaff 13th Mar 17, 7:57 PM
    • 1,774 Posts
    • 760 Thanks
    polymaff
    • #6
    • 13th Mar 17, 7:57 PM
    • #6
    • 13th Mar 17, 7:57 PM
    ... I cannot understand if I closed the company in 2013 why on earth they want the last five years worth of statements ?!
    Originally posted by Rcaff
    To see what you did during and after the life of the company.
    • chrismac1
    • By chrismac1 13th Mar 17, 8:38 PM
    • 2,466 Posts
    • 1,456 Thanks
    chrismac1
    • #7
    • 13th Mar 17, 8:38 PM
    • #7
    • 13th Mar 17, 8:38 PM
    As the silly NI stuff last week and the pasty tax stuff show, when dealing with HMRC you can never rule out the pernicious effect of the Numpty Department. Clueless wallies who often do not even know much about UK tax laws but nonetheless are drafting such laws and conducting tax enquiries.

    The vast majority of tax enquiries on my client base - I am an accountant - have been stupid and clueless beyond belief. For evidence, see my post from last month on the last enquiry I had. Overall HMRC have chased after over £250,000 in those enquiries, and achieved £67 - though in fairness I would have fought the £67 too but the client just could not be bothered.

    Don't just offer up these statements.
    Hideous Muddles from Right Charlies
    • bowlhead99
    • By bowlhead99 13th Mar 17, 8:51 PM
    • 6,897 Posts
    • 12,410 Thanks
    bowlhead99
    • #8
    • 13th Mar 17, 8:51 PM
    • #8
    • 13th Mar 17, 8:51 PM
    I have never had any other income so why do they suddenly think I do and how do I prove otherwise ?
    Originally posted by Rcaff
    It is quite difficult to prove a negative. So, giving them your bank statements and saying, "take a look, nothing to see here" would be a standard approach to help prove it.

    You suggest they look at your PAYE record, which shows you paid some tax on earnings as an employee. They already have that data and it simply tells them you had earnings from employment and paid tax on them, so is not very interesting.

    What would be more interesting to them is to find out whether, after having a bright idea to incorporate a company and set up a business in 2012, you changed your mind and decided to run the business instead on an unincorporated (sole trader) basis, running the trade through your normal personal bank accounts for the last five years and getting very rich without declaring any of the income, winding up the dormant company after a year or so once you decided you were happy with the unincorporated route. One way to help prove you didn't would be to say hey, here's my bank statements for five years, you can see there are no large mystery receipts or outrageous lifestyle spending. Showing the bank statements to be just normal ongoing household expenditure would put their mind at ease.

    Or for that matter, just for the heck of it, how do they know you didn't sell the dormant company for £50k, or close it down for cash so that someone else could use the name or one very similar to it. Or agree to wind it up in exchange for half a million pounds after one of the competitors in your industry made you an offer you couldn't refuse not to proceed with your venture and take a big market share from him. Again, showing the bank statements to be just normal ongoing household activities would be useful 'lack of evidence' that your business ever amounted to anything

    I am only reluctanct to send in the statements because I dont see why they should see what we are spending and on what. This smacks of big brother to me
    I guess there are others who might feel the same too, in your shoes. But on the other hand, do you really think the compliance officer at HMRC is going to be going back to his family this weekend and saying

    ..."'ooooh, you'll never guess what, I saw this one couple's bank statement this week and do you know what they spent as their average order at Pizza Hut over five years? I had my assistant add it all up, it was £700. £700 can you believe that. Most commonly, £16.99 a time. That's the price of a Veggie Supreme with a garlic bread isn't it, I've seen on the telly. So first I thought they are vegetarian but then one time three years ago they had what looked like a big order from Land of Leather, bit hypocritcal isn't it. But then I thought if they do have animal products but order something that looks like the price of a veggie pizza every few weeks, maybe they just don't like Pepperoni Feast or those Ham and pineapple ones. That's it, no pork, must be they're Muslim. And one summer they had a hotel charge from Egypt - Cairo it was, and that's an islamic country isn't it, so maybe they're muslims. And I said to my assistant Brenda, I said Brenda, ooh could they be an Islamist terrorist sleeper cell, that would be exciting?! But then we found last June they bought a new car, and you wouldn't buy a car in Ramadan as you'd be too hungry all day to enjoy it properly. So they're probably not Muslim, but with the no pork thing its probably they're jewish...

    Anyway we couldn't find any signs of her running a business through the personal bank accounts but I'm going to see if I can visit her at home, as they have an expensive Sky subscription so husband probably watches the sport all the time so maybe she feels like she needs more attention and whether they're jewish or muslim the husband's probably circumcised so perhaps she'd be up for sampling my uncut member, shall I see if I can get her round to our swingers club this weekend?"

    The reality is though, that the HMRC auditor couldn't care less about the tedious details that your bank statements might reveal about you, they are just looking to do some standard compliance checks. If they never audited anybody, loads of people would under-report tax. So, giving up your bank statements for a sample audit is just you doing your duty to play the game and keep the country running, like doing jury service once in a blue moon or whatever. Certainly doesn't seem worth going to court to fight it, unless you want to burn some taxpayers money when HMRC has to come to court, and you reaaally have nothing better to do with your time and want to arouse suspicion about what's hidden in your bank statements that shouldn't be.
    • le loup
    • By le loup 13th Mar 17, 9:04 PM
    • 3,641 Posts
    • 3,572 Thanks
    le loup
    • #9
    • 13th Mar 17, 9:04 PM
    • #9
    • 13th Mar 17, 9:04 PM
    Trouble is, once the inspector tells Brenda, she will tell Beryl and then it's be all over S!!!!horpe in no time.
    ......... that is S c u n t h o r p e
    • chrismac1
    • By chrismac1 14th Mar 17, 7:52 AM
    • 2,466 Posts
    • 1,456 Thanks
    chrismac1
    Anyone who trusts HMRC enough to give them information voluntarily that they are not legally entitled to is just a fool plain and simple.
    Hideous Muddles from Right Charlies
    • Pennywise
    • By Pennywise 14th Mar 17, 8:26 AM
    • 9,339 Posts
    • 16,968 Thanks
    Pennywise
    .....decided to run the business instead on an unincorporated (sole trader) basis, running the trade through your normal personal bank accounts for the last five years and getting very rich without declaring any of the income................ One way to help prove you didn't would be to say hey, here's my bank statements for five years, you can see there are no large mystery receipts or outrageous lifestyle spending. Showing the bank statements to be just normal ongoing household expenditure would put their mind at ease.
    Originally posted by bowlhead99
    You could say that about every adult in the UK. I don't think the average Joe Bloggs would take too kindly to HMRC requesting personal bank statements from 4 years ago just to prove you weren't running a sole trader business. Would you happily do it if HMRC asked you? Let's face it, HMRC don't know that you were running a side business and not declaring it either!

    HMRC are being completely unreasonable asking in this case and need to be challenged. If they insist on sight of them, then let the tribunal decide on whether it's reasonable or not. HMRC will pull out by then because they'd look foolish trying to justify to the tribunal why they want personal bank statements when they have zero, zilch, evidence that there was any undeclared income. It's all a matter of "reasonable" as per what really matters, the law. HMRC will always try to test boundaries but, even though they don't like it, they're still bound by the law and the tribunals.
    • chrismac1
    • By chrismac1 15th Mar 17, 7:47 AM
    • 2,466 Posts
    • 1,456 Thanks
    chrismac1
    The other important reason for not just yielding up information concerns the likely quality of person handling your enquiry. Going back 20 years, if I was facing an enquiry I could be confident the Inland Revenue person would know more about the UK tax laws than me and have some sort of understanding of where to press hard and where any pressing would just give him or her a bloody nose.

    Now I am very sorry to say there is every chance that you are in fact dealing with the village idiot wearing an HMRC staff badge and calling himself or herself a tax inspector. This means that they can aggressively pursue totally irrelevant things which have no possible bearing on a given tax liability, and frequently that is exactly how they behave. I am never really sure whether it is just utter lack of knowledge of UK tax laws, or a very low general IQ level.

    So don't be giving them any bones to chew on other than bones they are legally entitled to.
    Hideous Muddles from Right Charlies
    • Pennywise
    • By Pennywise 15th Mar 17, 9:28 AM
    • 9,339 Posts
    • 16,968 Thanks
    Pennywise
    Now I am very sorry to say there is every chance that you are in fact dealing with the village idiot wearing an HMRC staff badge and calling himself or herself a tax inspector. This means that they can aggressively pursue totally irrelevant things which have no possible bearing on a given tax liability, and frequently that is exactly how they behave. I am never really sure whether it is just utter lack of knowledge of UK tax laws, or a very low general IQ level.
    Originally posted by chrismac1
    Sadly, that's my experience too. But there's another angle which is the trainee inspectors who are "learning on the job" and seem to be given a random case to work a full inspection on for no valid reason except for improving their own knowledge and experience. This is totally out of order as it's just causing distress, wasted time and expense for the taxpayer.

    Not so long ago, I took on a client who was in the midst of an HMRC enquiry re their limited company. It was a purely "fishing" expedition - HMRC had no grounds to doubt the validity of the company accounts/returns submitted. The client didn't have an accountant, so when they go the first HMRC letter asking for various "innocent" bits of information & analyses, they went along with it and provided everything asked for. Despite none of that throwing up any red flags to HMRC, the "inspector" then wrote back asking for even more information, paperwork etc. This time, the client was a bit more reluctant, and phoned up the "inspector" but was abruptly told that "HMRC had the powers" blah, blah, so spent hours getting a big pile of paperwork together to post to HMRC. Then, they got another letter asking for the private bank statements and private credit card statements - again, absolutely no reasons given and nothing to suggest anything untoward. The client provided it all again as they genuinely thought HMRC had the right.

    Then, the killer letter came from the inspector with a list of transactions on the private bank account which HMRC wanted explaining and supporting paperwork provided. These included a handful of trivial cheques paid in, such as a tenner here and £25 there - totalled no more than a couple of hundred pounds. More stupidly, there was a 1p transfer from another bank account which HMRC highlighted and wanted to see all the bank statements from that account too. Then a list of cheques out for which he wanted the cheque book stubs and the paperwork/explanation for each (remember this is a personal bank account and not the company bank account and no company transactions had been put through that personal account!).

    That's the stage when the client had had enough and engaged me to sort it out. I looked through all the paperwork from both sides and quickly realised the inspector didn't know what he was doing and was just fishing, and therefore completely outside the scope of HMRC powers. I just ignored him and wrote a brief complaint to the manager outlining how helpful the client had been, how there were absolutely no grounds for the enquiry to continue and insisting on closure within 14 days otherwise I'd take the case to the commissioners for closure. I got a closure notice the following week!

    Don't put up with it.
    Last edited by Pennywise; 15-03-2017 at 9:30 AM.
    • bowlhead99
    • By bowlhead99 15th Mar 17, 9:36 AM
    • 6,897 Posts
    • 12,410 Thanks
    bowlhead99
    You could say that about every adult in the UK. I don't think the average Joe Bloggs would take too kindly to HMRC requesting personal bank statements from 4 years ago just to prove you weren't running a sole trader business. Would you happily do it if HMRC asked you? Let's face it, HMRC don't know that you were running a side business and not declaring it either!
    Originally posted by Pennywise
    Well, the average person hasn't incorporated a company with themselves as shareholder and director (which is not something one does completely at random on a whim without an intent to do business, as it's not free and involves companies law compliance) and then later strike off that company without apparently doing anything with it.

    So, while I and every average adult in the UK would be surprised and shocked if HMRC asked if we'd mind digging out our bank statements to help prove that we weren't running a business, that shock and surprise would stem from the fact that HMRC would have had no reason whatsoever to think that we were the type of people that would even dream of trying to run any kind of owner-managed business.

    Whereas, clearly, the OP did want to run a business and went so far as incurring the time and costs and ongoing obligations of creating a corporate entity through which they could transact that business.

    So, it seems a little disingenuous to say "HMRC have no inkling that this person wanted to run their own business, or was likely to have run a business or received any form of self employed income, how would you feel if they enquired about your financial situation and whether you ever got a business off the ground or received or business income into personal accounts". I and the general public don't have any history of creating and shuttering companies as owner-director in the last few years, so we'd be pretty surprised about their idea that I should participate in a compliance check /fishing expedition to close the loop on potential business affairs.

    I do agree with the other general points by you and the following poster about not opening up your affairs for ill-qualified numpties to play connect the dots in some harebrained way.

    But the idea that "well, it's not right they should ask her for something if they wouldn't ask you for the same", is pretty wide of the mark, IMHO. How can you ever expect lawmakers or tax collectors to work efficiently following a risk-based approach if you are not allowed to differentiate between people and ask person A for something if you wouldn't also ask person B in entirely different circumstances, for the exact same thing.

    Person B, and indeed the general population, do not have any indicators that there is anything to be curious about (in terms of income or other activities from a business that they wanted to create). The situation is *arguably* different for OP. So if the argument needs to be had, court or a tribunal is probably the place for it to establish what is reasonable.
    Last edited by bowlhead99; 15-03-2017 at 10:24 AM.
    • dori2o
    • By dori2o 16th Mar 17, 10:13 PM
    • 7,346 Posts
    • 12,244 Thanks
    dori2o
    As the silly NI stuff last week and the pasty tax stuff show, when dealing with HMRC you can never rule out the pernicious effect of the Numpty Department. Clueless wallies who often do not even know much about UK tax lawsbut nonetheless are drafting such laws and conducting tax enquiries.

    The vast majority of tax enquiries on my client base - I am an accountant - have been stupid and clueless beyond belief. For evidence, see my post from last month on the last enquiry I had. Overall HMRC have chased after over £250,000 in those enquiries, and achieved £67 - though in fairness I would have fought the £67 too but the client just could not be bothered.

    Don't just offer up these statements.
    Originally posted by chrismac1
    Again, HMRC do NOT draft tax laws. They are set by HM Treasury.
    To equate judgement and wisdom with occupation is at best . . . insulting.
    • chrismac1
    • By chrismac1 17th Mar 17, 8:42 AM
    • 2,466 Posts
    • 1,456 Thanks
    chrismac1
    Technically true. But our daft tax laws, like Making Tax Diabolical or sticking thermometers into Cornish pasties to see if it is 0% or 20% VAT, have the fingerprints of the Numpty Department of HMRC all over them.
    Hideous Muddles from Right Charlies
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

162Posts Today

1,359Users online

Martin's Twitter