HMRC Enquiries – Are Meetings Helpful?

James Bailey looks at whether meetings with HMRC in tax enquiries are a good thing.

I have always felt that meetings with HMRC were generally a good idea, unless there were special reasons for not having a meeting, such as a very nervous (or very irritable) client.

We also have to bear in mind that in certain circumstances, HMRC can now insist on a visit to ‘business premises’, using their powers (under FA 2008, Sch 36). Provided they get the appropriate authority, they can even turn up unannounced, and charge penalties if they are not admitted, provided they are visiting ‘business premises’. If you run your business from home, HMRC can still insist on visiting the parts used for the business – though their instruction manual on the subject reminds them to avoid the private parts of the property, and that “You should also be aware that you have no right to use the bathroom where it is not part of the business premises unless the person gives their permission”.

This article, however, is concerned with meetings arranged by mutual agreement, not with the more serious meetings conducted under HMRC’s statutory powers.

Unless there are very good reasons not to do so, I am a great believer in agreeing to meetings with HMRC – I may even suggest the idea before the inspector does, if I think it would be helpful.

The next question is where the visit should take place. In some cases, it makes sense for it to be at the business premises – in a case where HMRC want to examine a piece of plant and machinery, for example, or where they want to talk to employees – for example if they are checking up on compliance with the national minimum wage legislation.

Unless there is a specific reason to meet at the business premises, I believe the best place for a meeting is at your tax adviser’s or accountant’s office – and if you are the subject of a tax enquiry and you have not got a tax adviser, you should get one before agreeing to a meeting.

The worst place for a meeting is at HMRC’s offices, both because they are on their home ground and because you are likely to find it more stressful than the more familiar surroundings of your accountant’s office.

Before the meeting, it is usually helpful to ask the inspector for a summary of what he wants to cover at the meeting – he should not object to providing this. You should not expect a list of every question he will ask, but you can reasonably ask for the topics he wants to cover.

At the meeting itself, it goes without saying that you should tell the truth, but the most important thing to remember is that it is perfectly acceptable to say “I don’t know” in a case where you do not know the answer to a question, rather than guessing at the answer and possibly storing up trouble for yourself. 

After the meeting, it is usual HMRC practice to send you a copy of their notes of the meeting and to ask you to sign them if you agree they are accurate, or to let them know of any inaccuracies. I advise clients not to sign the notes, but definitely check for inaccuracies and to point these out. HMRC have no power to demand that you sign the notes.

Generally speaking, meetings with HMRC can help to progress a tax enquiry, but where possible have them at your tax adviser’s office and not at HMRC’s. Whatever you do, don’t guess at the answer to a question if you don’t know it.