How To Survive An Enquiry By The Revenue

The Low Incomes Tax Reform Group was formed in 1998 and is funded by the Chartered Institute of Taxation. The main objective of the LITRG is to provide help and information to those in the community who cannot afford to pay for tax advice, and to improve understanding of the tax system as a whole. The organisation also works to make the tax system more equitable and accessible.

Although the service offered by the LITRG is aimed at households with an income of £15,000 and below, the advice appearing on its website would be useful to any member of the public who wants to improve their basic understanding of how the tax system works.

The "Tax Help" part of the website has individual sections for pensioners, students and "low income workers". However, much of the advice given is of general interest. For instance, there is information about tax status, working overseas, appeals and complaints, Self Assessment, business record keeping, tax allowances, as well as a basic guide to VAT and an explanatory A-Z index of tax terminology.

The "News" section of the website has articles on a variety of subjects, including the working of the HM Revenue & Customs complaints procedure. However, the latest article is entitled "How To Survive An Enquiry By The Revenue" and this especially caught my eye. A new section of the website has been dedicated to providing information and advice about Revenue enquiries and how to deal with them. The advice given avoids unnecessary jargon and is of the common-sense variety. It provides excellent guidance to anyone confronted with an investigation process that can be at once complex, intimidating, time-consuming and frustrating.

I have selected just one gem in particular. Under "What to remember - a summary" it says "answer only what you are asked". I would like to add: "Do not waste your valuable time speculating about what the Revenue might have hidden up their sleeves, or in trying to read between the lines of what is being said". In my considerable experience of such cases, even professional people can get themselves into a mess by neglecting what is being requested and bogging themselves down in trying to guess what the Revenue are "really getting at". In most cases, the question being asked is just a simple request for information and should be treated as such.

I recall a Revenue investigation into a firm of solicitors that illustrated this very point. The enquiry could not be settled, because the Inspector of Taxes was waiting for some information about the computation of a doubtful debt provision. The proprietor of the business, his accountant, his auditor, and his tax adviser had wasted many hours in trying to guess what the Inspector really wanted. The result was that they got themselves into a state of confused inactivity and failed to provide the Inspector with what was required, so the enquiry dragged on, and the Inspector became more and more suspicious. Matters were finally settled when a new tax consultant was called in, who decided to give the Inspector what had been asked for: simply an explanation of where the figures came from.

The LITRG website is highly recommended.

Article by Keith Preece, Senior Tax Consultant, Qdos Consulting

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Posted 16/08/05

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