We are doing a wide range of HMRC-related work at the moment – for example, negotiating settlements to resolve legacy avoidance schemes, loan charge/disguised remuneration issues, dealing with complex HNWI and OMB enquiries or disclosures, and proactively helping HNWIs manage tax risk arising from operating internationally, coming to or leaving the UK. Time to pay issues and R&D enquiries are also hot topics.
If you could make one change to a tax law or practice, what would it be?
I would like to see more effective action taken at an earlier stage to tackle promotors/agents who are fraudulently selling arrangements to taxpayers or submitting false claims. There is no quick way for taxpayers to identify unscrupulous agents in order to avoid engaging them. Despite HMRC’s anti-avoidance investigation activity, the DOTAS regime and the enablers legislation in FA 2017 Sch 16, action against promotors is taken long after the event, by which time they have often disappeared and face none of the ramifications.
I appreciate it is a complex picture to piece together, but HMRC’s internal approach is not always joined-up between departments and even when it is, there are delays in making the public aware or preventing agents from operating at all.
Focusing efforts on cases, rather than point of sale, means that taxpayers are left to carry the costs of negligent advice – not only in professional fees, but also the substantial tax being due, plus interest payments and disputes over penalties. If behavioural penalties rest on showing that appropriate professional advice was taken, then more should be done to help taxpayers determine what is good quality professional advice, and there should also be a way to centrally report poor adviser behaviour to HMRC.
What do you know now that you wish you’d known at the start of your career?
Firstly, I wish I had realised that the earlier you start building your professional network, the wider and deeper it will be by the time you are more senior. Secondly, working in the mid-tier market rather than Big 4 requires a different kind of business development network.
Has a recent change in HMRC practice affected your work?
HMRC’s changes to the R&D schemes (effective from April 2023) have heralded an overall change in its enquiry approach that has caused real issues, as highlighted by the recent CIOT letter to HMRC. The new rules require a much greater depth of supporting information for claims, but HMRC enquiry caseworkers seem to be retrospectively applying this new standard to their examination of older claims. There is a lack of communication from HMRC teams with all interaction being pushed to written correspondence, and the level of information requested is both onerous and not reasonably required. Worryingly, HMRC also appears increasingly keen to charge penalties when seeking to deny claims on highly technical issues. As a profession, we are keen to work with HMRC to improve the quality of R&D claims, but it is currently difficult to have a meaningful dialogue.
In practice, the quantum of claims makes it difficult for SMEs to justifying ongoing enquiry/legal costs to challenge any unreasonable HMRC behaviour. There is a significant level of fraudulent activity in this area, but HMRC’s current hardening of approach is at a real cost to firms carrying out bona fide R&D that those reliefs were designed to encourage.
You might not know this about me but...
As my background is originally in social anthropology and archaeology rather than accounting or business-related, travelling to new places is a real passion of mine. I’m an avid scuba diver, so I combine the two by going wherever I can to dive around the world. Recent trips have included whale sharks in Tanzania, wreck diving in Palau and underwater fossil hunting in Florida. An added bonus is that email and mobile phones don’t work 40 meters under the sea!
We are doing a wide range of HMRC-related work at the moment – for example, negotiating settlements to resolve legacy avoidance schemes, loan charge/disguised remuneration issues, dealing with complex HNWI and OMB enquiries or disclosures, and proactively helping HNWIs manage tax risk arising from operating internationally, coming to or leaving the UK. Time to pay issues and R&D enquiries are also hot topics.
If you could make one change to a tax law or practice, what would it be?
I would like to see more effective action taken at an earlier stage to tackle promotors/agents who are fraudulently selling arrangements to taxpayers or submitting false claims. There is no quick way for taxpayers to identify unscrupulous agents in order to avoid engaging them. Despite HMRC’s anti-avoidance investigation activity, the DOTAS regime and the enablers legislation in FA 2017 Sch 16, action against promotors is taken long after the event, by which time they have often disappeared and face none of the ramifications.
I appreciate it is a complex picture to piece together, but HMRC’s internal approach is not always joined-up between departments and even when it is, there are delays in making the public aware or preventing agents from operating at all.
Focusing efforts on cases, rather than point of sale, means that taxpayers are left to carry the costs of negligent advice – not only in professional fees, but also the substantial tax being due, plus interest payments and disputes over penalties. If behavioural penalties rest on showing that appropriate professional advice was taken, then more should be done to help taxpayers determine what is good quality professional advice, and there should also be a way to centrally report poor adviser behaviour to HMRC.
What do you know now that you wish you’d known at the start of your career?
Firstly, I wish I had realised that the earlier you start building your professional network, the wider and deeper it will be by the time you are more senior. Secondly, working in the mid-tier market rather than Big 4 requires a different kind of business development network.
Has a recent change in HMRC practice affected your work?
HMRC’s changes to the R&D schemes (effective from April 2023) have heralded an overall change in its enquiry approach that has caused real issues, as highlighted by the recent CIOT letter to HMRC. The new rules require a much greater depth of supporting information for claims, but HMRC enquiry caseworkers seem to be retrospectively applying this new standard to their examination of older claims. There is a lack of communication from HMRC teams with all interaction being pushed to written correspondence, and the level of information requested is both onerous and not reasonably required. Worryingly, HMRC also appears increasingly keen to charge penalties when seeking to deny claims on highly technical issues. As a profession, we are keen to work with HMRC to improve the quality of R&D claims, but it is currently difficult to have a meaningful dialogue.
In practice, the quantum of claims makes it difficult for SMEs to justifying ongoing enquiry/legal costs to challenge any unreasonable HMRC behaviour. There is a significant level of fraudulent activity in this area, but HMRC’s current hardening of approach is at a real cost to firms carrying out bona fide R&D that those reliefs were designed to encourage.
You might not know this about me but...
As my background is originally in social anthropology and archaeology rather than accounting or business-related, travelling to new places is a real passion of mine. I’m an avid scuba diver, so I combine the two by going wherever I can to dive around the world. Recent trips have included whale sharks in Tanzania, wreck diving in Palau and underwater fossil hunting in Florida. An added bonus is that email and mobile phones don’t work 40 meters under the sea!
