Some years ago HMRC were given wider information powers and also a right of access to business premises. What we have seen of more recent times is HMRC attempting to use these powers but, regularly, overstepping the mark.
Two recent cases makes interesting reading. The first involved a General Practitioner who, for many years, acted as a locum and also has a private practice where she provides hypnotherapy services and cosmetic treatments. This case concerned an appeal against an information notice relating to an enquiry into the taxpayer's 2010/11 return, requiring production of the taxpayer's business appointments diary, which contained confidential clinical information about some of her patients but was said to contain no financial information.
The taxpayer has been a General Practitioner for many years, acted as a locum and also has a private practice where she provides hypnotherapy services and cosmetic treatments. HMRC started an enquiry and, amongst other things, demanded the business appointments diaries. The Tribunal held that:
'In light of the findings of fact, it seems to me to be impossible to hold that the business appointments diaries are reasonably required in order to check the taxpayer's position. They contain no financial information. They are not necessarily an accurate record of patients seen and services provided or charged for. On the evidence, there is no way of correlating the numbers of patients with the turnover generated.'
In a second case, the taxpayer was not so lucky. There was a 'history' between HMRC and the taxpayers concerned, who ran a Thai restaurant. HMRC had made a number of previous unannounced visits before the visit in question, on 7 March 2014, at 10pm. HMRC asked to speak to the director but were told that by a member of staff that they had been told by their accountant not to talk to HMRC but to refer them to him. The employee consulted with the director and then confirmed that they were not prepared to speak to the officers. A penalty was imposed by HMRC and upheld by the Tribunal.
The moral of all of this is to ensure that clients do not attempt to deal with HMRC themselves. There is no doubt that HMRC are flexing their corporate muscles, not always appropriately, and it is vital to get control of HMRC enquiries from day one.