Tax disputes & investigations

In recent times, some taxpayers were badly advised and entered into marketed tax avoidance schemes which they did not understand and which were not suitable for them.

We can help in reporting any past tax avoidance to HMRC, regularising the position, and seeking to mitigate any tax penalties which might arise.

HMRC’s crackdown on consultancy arrangements (which it is predisposed to view as income tax and national insurance avoidance) is widely reported in the press and high on HMRC’s agenda.  There have recently been a number of high-profile cases in the Tax Tribunal.

A persuasive case can often be made for the intended tax and employment law consequences of a consultancy arrangement.  But the law in this area is developing quickly and up-to-date knowledge of the relevant principles is essential.

Many internationally-mobile individuals have their corporate and/or trust structures based primarily outside the UK – albeit often with some UK nexus.

The Statutory Residence Test simplifies the residence test for individuals, in theory at least.  In reality, the rules are so complicated that detailed legal advice will often be needed – especially if HMRC make enquiries.

The position of companies and trusts is more complex still, and based on case law.  These structures can be made UK-resident by mistake – even if UK tax advice was taken when they were set up.  We are experienced in settling these cases, in one case agreeing a payment of only 10% of the tax originally demanded by HMRC.

We are seeing more and more domicile enquiries into international clients with a UK presence – even where HMRC had satisfied itself about a taxpayer’s overseas domicile relatively recently.  Whilst it may be unintentional on the part of HMRC, we have noticed that some communities seem more at risk than others.

Domicile is a complicated concept which is relevant to several aspects of life – including taxation.  Unfortunately, HMRC officers often misunderstand the issues and domicile enquiries balloon into intrusive and unwieldy exercises in data-gathering – usually with the justification that the responses sought all add ‘context’.

It is crucial to keep HMRC focussed on the real issues and to seek to limit the scope of the enquiry to the relevant points.  Experience of the legal and practical considerations is essential and affected taxpayers will inevitably need early advice.

Each year, HMRC select a number of individuals or businesses at random for a compliance check.

In all but the most straightforward cases, taxpayers selected for a check should quickly seek legal advice.  It is usually prudent to assume that you have been deliberately selected rather than chosen at random.  HMRC investigations can be time-consuming and stressful and it often helps to have a professional on your side to deal with the Revenue.  Experience shows that HMRC does not always act within its powers and an experienced solicitor can frequently narrow the scope of the enquiry – and reduce any potential tax liability.