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Covid 19 and its impact on HMRC interventions Stay calm and carry on …?

Covid 19 and its impact on HMRC interventions Stay calm and carry on …?

It has now been over two months since life as we knew it changed fundamentally and terms such as “lockdown” and “social distancing” have become common parlance. Few of us would have anticipated the dreadful reach of a flu-like virus on our nation’s health, nor indeed our economy.

The Government’s introduction of measures to alleviate the financial burden on individuals and businesses (e.g. the Job Retention Scheme) has led to the re-deployment of many HMRC staff. Because of this and HMRC’s appreciation of the pressures caused by the epidemic, HMRC has slowed down its activities insofar as its interventions are concerned (i.e. enquiries and investigations). Some taxpayers have even received letters from HMRC advising that “a temporary hold” has been placed on ongoing enquiries, albeit recipients are invited to get in touch with named officers if they would rather continue.

Our experience is that HMRC’s offer to put matters on hold has been welcomed by some clients. Some, however, have been keen to retain momentum and push on to bring enquiries to a conclusion. Such a view is not uncommon where, for example, enquiries have already been ongoing for a long time.

Where our clients are committed to continuing correspondence with HMRC we have seen some very positive outcomes during lockdown. In several cases, home isolated inspectors have been receptive to settlement proposals and we have been able to conclude a number of interventions over the last few months. There is no suggestion of a relaxation to HMRC’s Litigation and Settlement Strategy, but perhaps the circumstances have allowed space and time to allow agreements to be reached away from the normality of settlement negotiations.

We have seen in the last few weeks, some of our WDF (Worldwide Disclosure Facility) client cases being accepted and settled within a calendar month of HMRC receiving disclosures, i.e. significantly sooner than the 90-day turnaround times which are still being quoted.

We have also been able to secure some excellent penalty mitigations where our clients have instructed us to press on with a view to concluding enquiries. Of course, whilst it is anticipated that increased leniency should be available where taxpayer cooperation has been halted or slowed because of the epidemic, it should not be taken for granted that it will automatically be forthcoming in every circumstance. It is important, therefore, to remain alive to the telling, helping and giving reductions where penalties are in point.

Our experience is that inspectors managing more serious enquiries under Codes of Practice 8 and 9 have also been prepared to pause existing enquiries. At the same time, new cases have not been registered.

As signs emerge that lockdown measures are starting to be relaxed, we are informed that HMRC intervention activity is slowly picking up again as new enquiries begin to be taken up by HMRC. However, it is likely to be some time before we can say that things are “back to normal” (whatever that may look like). What is for sure, however, is that open enquiries and disputes with HMRC will not simply be forgotten or just disappear. They will be waiting for us to emerge from an historic period spent in isolation. Therefore, clients where their health or the health of their families is not impacted directly by this horrible disease, may wish to bite the bullet and re-engage with HMRC now and put troublesome enquiries behind them once and for all.