There are broadly four types of people who come to read this page,
1. You are a tax advisor or accountant looking for front line tips.
2. You are an HMRC employee.
3. You’ve been the subject of a HMRC investigation - so you are now saying, “If only I’d read this X years ago!”
And Finally 4. You are now being investigated and you are unrepresented (or poorly represented) and you need some help. God bless you Sir / Madam because I created this site to help you, please stay and read on, this is my story with evidence!
The story starts in Sheffield, England over a decade ago where I went on an Enterprise Allowance course. We spent a day on basic book keeping and I grasped the ins and outs of the paperwork. A year later I started up in business as a journalist. I showed business people from the Training and Enterprise Council (TEC) and the Prince’s Youth Business trust my paperwork. They smiled and nodded, it all looked in order BUT they were looking at cash-flow statements but I was using those figures in my profit and loss accounts. The big difference is this: you include your drawings on a cash-flow statement, but not on a profit and loss account.
My figures were out as I was claiming my drawings as an expense, but as I wasn’t using an accountant nobody alerted me to this. However with the tax returns I filled in I enclosed a letter stating, “I found the attached tax for complicated and difficult to fill out.” I added that I’d done “my best with the paperwork” and I also enclosed a list of figures showing how I’d calculated my profit, you can see an example of this here. Any tax professional looking at this - even for a second - would see that I’d claimed my drawings as an expense and the figures were wrong. I reasonably assumed that my Self Assessment returns would be read by HMRC (then the Inland Revenue) but they say that they don’t read their own returns, not even the “extra information” box. They therefor reason that they can’t be responsible for information given to them!
But in November 2000 my return (for the year ending April 2000) was opened and read by a member of HMRC, the action is recorded in the notes that can be seen here. But despite now knowing that the figures were wrong the HMRC staff member took no remedial action. Things got worse in October 2004! In April that year I’d incorrectly requested a tax refund, the HMRC investigations team became aware of this - specifically Peter Canning - but rather than take simple remedial action HMRC decided to “release repayment” ie refund the tax they knew I wasn’t entitled to! It sounds hard to believe, I know, but the evidence for this is in the file notes which are here.
By July 2005 I was living in Brighton. That month I got a letter saying there was an enquiry into my return. I was invited to an interview which I went to unrepresented - I naïvely felt I had nothing to fear since I’d been open and honest with my returns. I knew I was in trouble when - four weeks later - I read the HMRC interview notes from the meeting: they were inaccurate and did not reflect what was said - they didn’t even get my name right. I was asked to sign a copy, I refused.
The HMRC officers became belligerent petty and pedantic; no item was too insignificant to examine in the smallest detail: one example is a £10 expense - a David Beckham book, the details of which are here.
The HMRC officers were rude, particularly Jacqui Lamper (who has since left her job) you can listen to simples of our conversations here.
HMRC officer Jacqui Lamper continually asked me for evidence, but then refused to say what evidence would satisfy her - I’ve since learned that this is a common trick. You can listen to samples of that going on here, she is so good (and so practised) at this you have to listen to it a few times to realise what is going on.
HMRC officers also appeared to be ignorant of the basics of tax law - such as tax points - here HMRC officer Steve Coomber was confronted about his lack of basic tax knowledge - his reaction was to threaten to hang up the phone.
Late in August 2006 Jacqui Lamper and Steve Coomber agreed that there was not much of a case - it would be better to close the enquiry, see conference notes here.
Despite this decision the case remained open. In order to justify keeping the enquiry open for such a protracted length of time and to open up earlier years for investigation the enquiry officer must make “a discovery” which means a significant find in the enquiry: HMRC needed to discover something that was not available at the point of return. The big discovery would have been that I had been wrongly claiming my drawings as an expense - but matters were complicated by the full disclosure on my returns. So was a discovery made? Jacqui Lamper and HMRC have constantly their minds over what the discovery was. More here.
What a mess! And all because back in 2000 nobody thought to pick up the phone and say, “Oh, Nick you need to see an accountant mate or we are going to be all over you like a bad rash - sort it out!” So - seriously - why was there no elemental remedial action when 1. my accounts were obviously wrong and 2. HMRC knew about it? I phoned Peter Canning from the Brighton Risk, Intelligence and Analysis Team (RIAT) and asked him what the “I” in RIAT stood for, this was his answer.
By now I’d come to realise that my experience was far from unique and that tax payers’ cash was being squandered by overzealous tax inspectors on insignificant enquiries left right and centre, so I wrote a piece about my experience for The Sunday Times, which you can read here.
If you’re category 4 and you have reached the end of this page, then I’d love to hear from you, I can almost certainly help and I can be reached on nickmorgan02@hotmail.com
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