Can HMRC request this??

JonothanBurford

Hi there,

I posted on here a week or so ago and received some useful advice, I hope to receive some more!

I wrote about my step-son (lived with me at the time) making payments to me, typically c. £250 pw. This was part household keep and payments to me that when £15,000 accrued, I would then withdraw available funds from my mortgage account (£30,000 or double what he saved) to put a deposit down on the purchase of a BTL property. The property is now acquired and will be transferred over to him when he is in a more secure financial position (I'm aware of Capital Gains implications).

I am undergoing a self assessment investigation by HMRC. I am confident that my figures are correct but HMRC, after sending them my bank statements have enquired about the monies coming into my account for that particular year from my step-son. I explained the reason for these payments but now they want to see my step-son's bank account. I didn't want to worry my step-son but can HMRC actually request these? The inspector said over the phone that they need to see the source of the income.
My step-son earned typically £350-400w himself from a mixture of PAYE and CIS deductions (both jobs had tax stopped at source and both earnings declared as such on Self Assessment return).

What should I do? There was nothing untoward going on but should I have anything to worry about?

Thanks

chrismac1

I do not see the relevance of this to an enquiry into your self-assessment position. HMRC often attempt to pull fast ones on unsuspecting taxpayers, normally this involves requesting bank statements for personal accounts in the course of an enquiry into a business. In these cases, unless the taxpayer has used personal bank accounts for business transactions, HMRC need to get lost!

Accountants will routinely tell HMRC to get lost in these cases and Tribunals, if necessary (i.e. HMRC just charge full steam ahead towards the iceberg) will also then tell HMRC to get lost.

So in my view unless HMRC can show a direct link from these accounts to your self-assessment return, they can get lost! After all your stepson will be in self-assessment for the CIS deductions so they get a full account from his SA number.

My policy where HMRC try it on like this is to politely refuse for one letter and then if a second one is needed GO IN HARD. I make it clear that I view the request as a needless waste of scarce public funds, that I hold the inspector personally accountable and will mention him or her by name in any future letters I need to write to the head of his or her tax office, the local MP, Lin Homer (head of HMRC and yes I have written to her once) and George Osborne (ditto).

So far the HMRC person has caved in every time in response to the agressive letter, they don't like it when their victims fight back hard!

JonothanBurford

chrismac1 wrote: »

I do not see the relevance of this to an enquiry into your self-assessment position. HMRC often attempt to pull fast ones on unsuspecting taxpayers, normally this involves requesting bank statements for personal accounts in the course of an enquiry into a business. In these cases, unless the taxpayer has used personal bank accounts for business transactions, HMRC need to get lost!

Accountants will routinely tell HMRC to get lost in these cases and Tribunals, if necessary (i.e. HMRC just charge full steam ahead towards the iceberg) will also then tell HMRC to get lost.

So in my view unless HMRC can show a direct link from these accounts to your self-assessment return, they can get lost! After all your stepson will be in self-assessment for the CIS deductions so they get a full account from his SA number.

My policy where HMRC try it on like this is to politely refuse for one letter and then if a second one is needed GO IN HARD. I make it clear that I view the request as a needless waste of scarce public funds, that I hold the inspector personally accountable and will mention him or her by name in any future letters I need to write to the head of his or her tax office, the local MP, Lin Homer (head of HMRC and yes I have written to her once) and George Osborne (ditto).

So far the HMRC person has caved in every time in response to the agressive letter, they don't like it when their victims fight back hard!

Hi Chrismac1,

Thanks for taking the time to reply, much appreciated.

I've read about their giving, telling and helping system and I'm just a little concerned that if I don't co-operate and they do find fault, possible penalties would be higher? It's laughable when I read through it, it's tantamount to blackmail.

I really don't mind sending them the statements but I was just wondering whether they had any right in law? If not, they should be asking and not telling me to send them. At the end of the day, it's up to my step-son as to whether he releases any of his personal information to third parties.

chrismac1

To be honest, about once or twice a year I write or ask someone in HMRC to tell me the clause and Act of Tax Law they are relying on for a request they have made of a client or me. To date JUST ONE SINGLE one of them has actually responded. I conclude that either they just don't know the law or they think they are above the law.

Coneygree

Hrmc is governed by ACTS, which is legislation that is governed by consent. If you do not consent, they have no right by law to TELL you to give them your step sons statements. They can only request.

quietriot

Coneygree wrote: »

Hrmc is governed by ACTS, which is legislation that is governed by consent. If you do not consent, they have no right by law to TELL you to give them your step sons statements. They can only request.

Just for the record, this is nonsense.

Coneygree

Actually if you actually read up about it, then you will see its true...

SeniorSam

What on earth is everyone so worried about? If a simple check on the step sons bank statements is required, just send the copies. The step son should not be worried, Jonathan should also not be worried and to argue the fact of HMRC having the right or not, is just wasted time.

It really amazes me how many people want to challenge systems, when just sending information will solve the problems.

The alternative is that HMRC will continue to investigate as they are not sure that this may be additional income not declared, may possibly impose additional tax on income of Jonathan, which we know was not actually income, but without clarification, by sending bank statements, it is still a question mark.

Do we all expect the HMRC to simply accept figures without asking for them to be clarified in some way. I think we all know what that could easily result in.

Sam

zygurat789

SeniorSam wrote: »

What on earth is everyone so worried about? If a simple check on the step sons bank statements is required, just send the copies. The step son should not be worried, Jonathan should also not be worried and to argue the fact of HMRC having the right or not, is just wasted time.

It really amazes me how many people want to challenge systems, when just sending information will solve the problems.

The alternative is that HMRC will continue to investigate as they are not sure that this may be additional income not declared, may possibly impose additional tax on income of Jonathan, which we know was not actually income, but without clarification, by sending bank statements, it is still a question mark.

Do we all expect the HMRC to simply accept figures without asking for them to be clarified in some way. I think we all know what that could easily result in.

Sam

If one of the largest nations on earth saw fit to amend their constitution for the fifth time there must be something in it.

chrismac1

SeniorSam appears never to have dealt with an HMRC enquiry. Generally speaking, the more information you give them, the more questions they ask, the more time is spent and the more the costs get loaded onto either the client or the tax investigation insurers, if the client has that cover.

I have always adopted the policy of restricting HMRC only to information which is clearly directly relevant to the matter in hand, and where I have refused an information request I have asked the inspector to state exactly why he or she considers it to be relevant.

I can cite numerous tax cases where volunteering free information, or submitting to onerous information requests, led to all sorts of unjustified trouble for HMRC's victim.

So far I have never encountered a situation where something happened to cause me to doubt the wisdom of the above policy. If it does happen of course I will re-consder the policy.

quietriot

Coneygree wrote: »

Actually if you actually read up about it, then you will see its true...

You're an idiot. Laws do not need consent of those governed by them to be valid.