Inland revenue (IR) interest in stoozing?

schiff

I have made more or less a similar suggestion earlier on in this thread.

The problem is that the avoidance of confrontation by an individual can mean the Revenue getting away with exceeding their powers. This is why I made the point that the SSs really ought to engage an agent - when an agent says to the IR 'Ere you can't do that!', it's what the Revenue expects an accountant to say!

Bordera

schiff wrote:

I have made more or less a similar suggestion earlier on in this thread.

The problem is that the avoidance of confrontation by an individual can mean the Revenue getting away with exceeding their powers. This is why I made the point that the SSs really ought to engage an agent - when an agent says to the IR 'Ere you can't do that!', it's what the Revenue expects an accountant to say!

That is it exactly schiff.

Elegantly put.

smartsaver

Update:

Mr SS called and spoke to a manager. She adv that we are being investigated because Mr SS did not disclose interest earned on our current account on his short tax return so they wondered what else he had not declared.

So at least now we know the reason why

The interest is about £40.00 so nothing great and higher tax has been deducted at source.

Manager advised we do not have to submit everything asked for but it would look better if we did. So I suppose off it goes. Mr SS to take it in with a letter on Friday.

Letter is stating 'we understand we do not have to give you all of this but will do for the sake of goodwill'.

Can't see what harm it can to to let them plough through the lot. Again thanks for all your help and advise guys..

johnllew

smartsaver wrote:

Manager advised we do not have to submit everything asked for but it would look better if we did.

Very strange advice - if you aren't required to submit something, don't.

Can't see what harm it can to to let them plough through the lot.

More questions I imagine!

ctm_2

smartsaver wrote:

The interest is about £40.00 so nothing great and higher tax has been deducted at source.

And here lies the problem!! Even if higher rate tax had been deducted at source in respect of interest by way of a deduction in the code, by not including the interest in the return, you will therefore get the equivalent amount given back to you, either as a refund, or by your liability being decreased.

Although it is a small amount, you can probably now understand why they are doing this.

Bordera

smartsaver wrote:

Update:

Mr SS called and spoke to a manager. She adv that we are being investigated because Mr SS did not disclose interest earned on our current account on his short tax return so they wondered what else he had not declared.

So at least now we know the reason why

The interest is about £40.00 so nothing great and higher tax has been deducted at source.

Manager advised we do not have to submit everything asked for but it would look better if we did. So I suppose off it goes. Mr SS to take it in with a letter on Friday.

Letter is stating 'we understand we do not have to give you all of this but will do for the sake of goodwill'.

Can't see what harm it can to to let them plough through the lot. Again thanks for all your help and advise guys..

If they think that you missed some interest then they can ask about interest, Higher rate tax will NOT have been deducted at source though. HR tax is 40% and the tax deducted from interest is 20%.

Smartsaver, I think they are going to try to say that all the interest from your stoozing should be taxed on Mr SS at 40%. Especially if the cards are in his name. And yes! they can try to do that.

What does she mean it would "look better"? That sounds like a threat to me. She is saying they know they are not entitled to ask but will bully you for the information anyway. That is illegal. I know you are worried, but please... ask yourself why they want credit card statements. This worries me more and more, not so much for the effect on you but the impact it may have on other husband and wife stoozers.

gingercordial

In my experience (accountant & tax adviser) the Revenue have been making more and more ridiculous demands for information from taxpayers over the last year or so, I imagine on the assumption that most taxpayers will just hand it all over because they're scared not to.

Legally an inspector can ask for documents which he/she "may reasonably require for the purpose of determining whether and, if so, the extent to which the return is incorrect or incomplete."

Per the Revenue's own guidance, "reasonable" is supposed to mean "fair and sensible" and the inspector should have thought about how to justify the request before making it. In practice they don't seem to be doing this any more.

You have 30 days to appeal the request.

If you do decide to let them have the statements, remember you don't have to give them the originals (unless they've specified they want them) and you don't even have to go to the expense and trouble of sending them off yourself (tell them to come and get them if you want - the requirement is only to make them available).

Incidentally I'm impressed you've got your 04/05 return in early enough to have an enquiry already!

gingercordial

Oh yes, and I totally agree with Bordera that the manager shouldn't have asked you to send them in because it "looks better". She's admitting they can't ask for them but hoping you'll ignore that fact.

schiff

Things are really hotting up on here and I think we must getting near to the crunch.

I heartily agree with the advice the SSs are getting. Why send stuff in when you don't have to.

And gingercordial's contribution is very relevant in my view and it obviously comes from 'hands on' experience. One or two of us have questioned whether the IR is (strictly speaking) out of order with what they are asking for and his insight supports that completely.

Why not just provide the full information about the omitted interest account as starters and see where you are asked to go from there.

Cook_County

Following the debacle in Arctic Systems we still don't know if HMRC will be given power to appeal to the House of Lords. Consequently in my experience it is extremely unlikely that they will try to reallocate the investment income to the spouse who did the stoozing.

HMRC do not have powers to conduct a fishing expedition; nor can they infer they have evidence (even if they do) without telling you first (in writing) what it is, because otherwise they cannot enforce penalties.

All very exciting. A letter apologising about omitted bank interest accompanied by a cheque for the additional tax lost (20%) should settle this.

Ask in your letter for a notice formally closing the S9A enquiry stating that to the best of your knowledge and belief there are no further items omitted. Nonetheless, if HMRC have evidence of other omissions then they should state what they believe these to be so that you can provide relevant evidence.