Case Studies

Case study 1

Enquiry into tax returns escalated to a Code of Practice 9 Investigation

HMRC opened a standard enquiry into an individual’s tax return. Correspondence was exchanged between the incumbent advisor and HMRC pertaining to his lifestyle, but after nearly two years since the opening letter, there seemed no end in sight for the client.

It was at this point that matters turned quiet and the incumbent advisor was not able to obtain an update to matters from the HMRC officer he had been dealing with. The client then received a Code of Practice 9 (COP9) investigation letter from HMRC’s Fraud Investigations Service (FIS) offering him the Contractual Disclosure Facility (CDF).

It was established that the main reason for HMRC escalating matters to a COP9 suspected tax fraud investigation was the suspicion that the individual had not made a full disclosure of all issues to the originating officer.

Once Brebners became involved, the offer under the CDF process was accepted and an accurate and complete outline disclosure was submitted to HMRC.

Shortly thereafter a detailed disclosure report covering all the issues was completed setting out the non-reported cash sales which the individual had received and had not disclosed to the originating officer. The disclosure report also set out technical representations, supported by case law that no tax should be due on the disposal of several properties, as Principal Private Residence relief applies. 

HMRC accepted all of the representations which Brebners submitted regarding the properties which saved the client in the region of £200,000 in tax, interest and penalties. A financial settlement was reached in the sum of around £150,000 which included a substantially reduced penalty to reflect the excellent cooperation provided to HMRC since Brebners commenced to act for the client.

Case study 2

Enquiry into tax affairs, discovery assessments, appeals and mediation

HMRC wrote to an individual to ascertain why he hadn’t submitted tax returns for the past several years. There were several genuine reasons for this and Brebners assisted the individual by submitting tax returns for the previous 6 years. HMRC duly accepted these and the individual set about paying the amount he owed.

HMRC then asserted he had deliberately failed to submit earlier years returns and raised discovery assessments and penalty determinations giving rise to liabilities in excess of £400,000. These were appealed against on the basis that the individual had not deliberately failed to submit his tax returns and that the income he had received was from employment, which HMRC was already aware of. A formal review of the case was undertaken by HMRC. The outcome of the review was that the original decision was upheld. It was therefore necessary for Brebners to appeal to the First Tier Tribunal in order to defend the individual and articulate further representations to a Judge.

HMRC Solicitors Office initially wished to pursue the matter and a statement of case was submitted. Brebners then undertook a detailed case review involving all the points raised by HMRC during the course of their enquiries. This was compared and contrasted to case law, HMRC guidance and various other external references to produce a “Bible of Documents” which could be referred to as part of any Tribunal Hearing.

Prior to the Hearing, an all-day mediation meeting was held with the originating officer and his colleagues from HMRC Solicitors Office. This meeting enabled Brebners to articulate their concerns on the case in an informal setting. Following this meeting HMRC confirmed that they did not wish to pursue the case any further and the assessments would be discharged, saving the client the added stress of attending a Tribunal Hearing and not having to face a tax bill in excess of £400,000.

Case study 3

Disclosure under the Worldwide Disclosure Facility (WDF)

An individual had received a gift of monies from his parents approximately 10 years ago which he had invested in an offshore share portfolio. Over the past few years, some of the shares had been sold in order to reinvest in others.

The individual was made aware that the dividends and capital gains should have been reported on his UK tax returns and at this point he turned to Brebners to assist him.

Brebners made a voluntary disclosure to HMRC by initially registering the individual under the terms of the WDF. Brebners then used the data provided by the Financial Institution to undertake a calculation of the unpaid tax by reference to the various share disposals. Interest and penalties were then calculated and a final disclosure submitted using HMRC’s Digital Disclosure Service.

HMRC accepted the voluntary disclosure enabling the client to have piece of mind that his tax affairs were now up to date.