Contractors' Questions: Can HMRC chase me over Green Bay Consulting?

Contractor’s Question: It’s come as a bit of  a surprise that HM Revenue & Customs is chasing me for using ‘Green Bay Consulting,’ relating to tax year-end 2005. In general terms, what should I do to defend myself? Isn’t it likely to be too long ago (more than a decade) for HMRC to find evidence against me?

Expert’s Answer: I can only provide the general response that you seek, because some important details are missing. For example, you say that HMRC is chasing you, but it is not certain what form that ‘chase’ is taking. If you have received a formal notice of investigation then specific advice could be offered to you, but if you have received a random phone call or request for information, then that advice would differ.

Almost regardless of the type of approach you’ve received, you should be aware that HMRC has a well-defined period during which it can open an investigation, and that window of opportunity is now well closed for the 2005 Self-Assessment Year. Unfortunately that is not the end of the matter, as an investigation can be instigated at any point if there is a relevant ‘Discovery.’ If you have received a formal Notice of Investigation or Assessment, you should challenge it and seek clarification of the relevant Discovery to determine whether what HMRC rely upon is in fact credible. If it does not constitute a Discovery, then HMRC cannot justify opening an investigation after the appropriate window has closed.

In some cases in the past, HMRC effectively opened investigations by issuing assessments or determinations within the time permitted but because of the nature of their investigations into the use of tax mitigation schemes, took no further action for many years. In those cases the assessments will have become final (if not appealed against) and individuals may be exposed to further assessments. As a first step, and on the basis that you obviously know if you have appealed against any assessment, I would request a copy of the 2005 self-assessment tax return (as lodged), and for copies of all other documents issued by HMRC since then.

If HMRC cannot produce evidence of an investigation having being undertaken (and to do so will not be an easy task), and there is no Discovery, then their position may be challenged.  This is simplistic but is an excellent starting point.

In addition, it is worth bearing in mind that in some Contractor Settlements HMRC have ceded some years despite wrap around years both being assessed. If 2005 is such a year for you, then you may have a case that you are entitled to symmetry of treatment with other scheme users and so escape the charge.

But as already mentioned,  your first action should be to establish whether HMRC have any legal right to investigate you for 2005 and, if they do, you should strongly consider taking advice from a professional firm.

The expert was former Inland Revenue inspector John Green, a tax investigations specialist with Cobham Murphy.

Editor’s Note: Related Reading –

Taxman no longer limited to six-year look back

Contractors’ guide to penalties iv) HMRC enquiries

In HMRC V Contractors, battle lines are drawn

Thursday 4th February 2016