Can HMRC ask for that?

questions

Yes – is the simple answer!  But perhaps the question really should have been “Are HMRC entitled to have access to that?”  Anyone can ask for anything.  But can HMRC have access to that information?  The information may be sensitive.  Asking is one thing – giving is another.

There is a supplementary question you should think about at the same time.

Is it reasonably required?

Information can only be reasonably required where it could affect a person’s tax position.  If having the information could not affect a person’s tax position now or in the future it is not reasonable to require it.

Is it just a fishing exercise?

HMRC have many legal powers to support their role in policing the UK tax system.  None of those powers allow HMRC to go fishing.  There are safeguards which an experienced specialist will be alert to.  It does no harm to remind HMRC of the rules.

Information requests

Schedule 36 FA 2008 gives HMRC certain formal powers in respect of information requests.  An information request is made in writing.  This allows the taxpayer to study the request before responding.  An Inspector may ask the same or similar question in a meeting or Teams call when you are under even more pressure to respond.

It can all go horribly wrong

Imagine being in a meeting with an Inspector as you have decided you don’t need a specialist.  You have gone fully prepared with every file and piece of paper you have – and some.  You have read HMRC’s factsheet and want to help.

The meeting begins with you and the Inspector sat opposite each other.  As the meeting progress, the details get more and more  complicated so you demonstrate the points to the Inspector who is now almost sitting next to you (as much as Covid19 restriction allow).  But the Inspector has difficulty reading some of the documents so you hand the papers over instead.

The same applies when you share your screen on a Teams call and then you allow HMRC to take control.

Bingo.  Complete unfettered access.

Look at all the post it notes.  Pink, yellow, green and blue – all the colours of the rainbow.  Somebody has also been quite busy with the highlighter pen too.

The number of questions has just increased exponentially.

Perhaps the final tax Settlement has risen in the same proportion.

So what should you do?

Seek specialist advice.

Attending a meeting or Teams call with HMRC on your own and allowing HMRC unfettered access to any information or documentation can be dangerous (and expensive!).

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