Regrettably, those days are little more than a fond memory. Tax Inspectors now take a much more uncompromising attitude to such matters, which may well be due to the influence of the ‘Customs’ side of HMRC, following the merger of the Customs and Excise and the Inland Revenue. Customs Officers have traditionally dealt with people whose activities are criminal and their Inspectors have as a matter of course adopted a very robust attitude to dealing with taxpayers since they were given the job of supervising the collection of VAT. That attitude appears to have rubbed off on the ‘Inland Revenue’ side of HMRC.
Proof of the increasing difficulty in negotiating with HMRC can be seen in the rapidly increasing number of taxpayers who appeal against the decisions of HMRC Officers to the VAT and Duties Tribunal and the Special Commissioners of Tax. The number of such appeals has risen from 2,014 in 2002 to 3,146 in 2006.
The 2008 Budget contained provisions which give HMRC Officers significant new powers to obtain information concerning the financial affairs of taxpayers, including the right to require third parties to provide information and making the failure to provide information in certain circumstances a criminal offence.
If you are engaged in a dispute with HMRC, you should ensure that you have the benefit of professional advice and do not compromise your position if you have to go to a tribunal.