Receiving an unwelcome letter through the post in some ways is quite novel in this age of emails but such letters are even less welcome when they come from HM Revenue & Customs (HMRC). So what do you do when such a letter arrives?
What might be an unwelcome letter?
HMRC can issue Assessments, Accelerated Payment Notices (APNs) and Follower Notices that require taxpayer attention. It may be that the amounts have been estimated and invariably higher than they should be.
Option 1- do nothing
Assuming the ostrich posture is not a good strategy.
Option 2- do something – but what?
Seek advice on the unwelcome letter.
The advice should consider what is practical.
HMRC are looking to crack down on all forms of tax evasion and tax avoidance following their publication of “No safe havens” in 2013 and updated in 2014. HMRC’s strategy has not changed and the government are steadfast in blurring the edges between what exactly is (illegal) tax evasion and what is (legal) tax avoidance. Deferring or ignoring the issue will not make it go away. In practical terms the issue needs sorting.
Opening a dialogue with HMRC
They say its good to talk. Certainly HMRC do not like their unwelcome letter to be ignored and where penalties can be levied, the penalties are highest where HMRC consider the taxpayer has deliberately understated their income and/or gains and hidden such funds in another territory. Moving territories can now incur an enhancement to the penalty cost.
You may think that such an unwelcome letter is just mischief making by HMRC – unlikely. If you are on their radar for whatever reason, you need to open a constructive dialogue.
There may be a misunderstanding or perhaps you thought all tax avoidance schemes work – recent successes by HMRC in the Courts may suggest otherwise. HMRC already have a lot of intelligence from their CONNECT software which will soon be enhanced by the Automatic Exchange of Information under the Common Reporting Standard by the end of September 2017.
So what should you do next?
If you receive such an unwelcome letter, seek advice.
You can contact me at firstname.lastname@example.org or Andy at email@example.com and we can give you practical advice.