11.45 - 12.25
HMRC latest tactics and hot topics from
the advice line
Paul Rigney
Client Support Manager, Taxwise
www.ifa.org.uk
Taxwise Services Limited
Fee Protection Insurance
www.taxwise-online.com
Working in partnership with
The IFA
AGENDA
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Who are Taxwise?
Advice Line – hot topics
Claims – HMRC trends
Claims – case studies
Why offer Fee Protection Insurance
Panel Q&A
Who are Taxwise?
Taxwise are providers of Fee Protection
Insurance facilitating insurance to cover
professional accountancy fees arising from
HMRC enquiries, compliance visits,
interventions and disputes.
What is Fee Protection
Insurance?
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Insurance policy
Allows an accountant to defend clients
In the event of an HMRC enquiry
Policy pays for all of the fees incurred
Clients get professional representation
and peace of mind
Who are Taxwise? Key facts
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3,000 accountancy clients
£13m premium income
60 staff
FCA Authorised (previously FSA)
Peninsula Group
Irwell Insurance Company
Advice Line – hot topics
• Tax and VAT advice lines
• Free/Unlimited for all accountancy clients
• 50,000 advice calls per annum
• Brief overview of some of the most
frequent questions
IHT – estate reduction
• Gifting money
• How can the gift be IHT exempt?
• Annual Exemption limit - £3,000
• Lifetime Transfer of Value
IHT – estate reduction
Lifetime Transfer criteria:
• The gift was part of the donor’s normal
expenditure
• The gift was made out of after tax income
• The donor is left with sufficient income to
maintain usual standard of living
• A pattern of expenditure has been established
by a prior commitment
Loans to Directors
• Loan to owner Director
• Often no intention to pay it back
• Often the loan is written off
• What are the implications?
Loans to Directors
• Treated as a dividend for the individual
• Treated as earning for National Insurance
purposes
• The write off is not allowable for
Corporation Tax purposes
Residency
• Who is entitled to Personal Allowances?
• Individual becomes non-resident
• Investment income in the UK
Residency
• Individuals not resident in the UK generally have
no entitlement to claim UK reliefs or allowances
• Previously a claim could be made for personal
allowances purely by virtue of being a
commonwealth citizen
• There is now a limited range of circumstances
under which a non-resident can benefit from UK
personal allowances
Company Cars
• Provision of a company car
• Employee contributes
• Hopes to reduce/extinguish the benefit
• How to calculate the correct benefit?
Company Cars
• The provision of the car has to be included on
the P11D
• Employee contributions reduce the cash
equivalent figure of the benefit
• If the contribution is equivalent to the P11D
value of the benefit then the benefit is reduced to
nil
Company passengers!
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Employee
Own car
Up to 45 pence per mile for 10,000 miles
Then 20 pence per mile
• What about passengers?
Company passengers!
• HMRC allows 5 pence per mile per
passenger
• Discretion of the employer
• No right to claim via HMRC if employer
does not reimburse
• No right to claim ‘top up’ if employer pay
less than the allowance
Claims – HMRC trends
• Annual compliance yield
• Additional £7bn per annum
• Target date – 2014/15
Taxwise claims:
2009/10 – 2,000 claims
2012/13 – 5,000 claims
Claims – HMRC trends
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32% PAYE/VAT Compliance Visits
1% Interventions
1% Cross Tax Enquiries
56% IT and CT aspects
10% Full Enquiries
HMRC Activity
HMRC income from investigations into personal tax returns
Claims – HMRC trends
• Enquiries concluding faster
• HMRC risk profiling
• More enquiries, more focussed
• HMRC doing what always done but…
…more of it and with more focus!
VAT Dispute claim
• VAT Assessment £136k raised in 2010 and further
adjustment of £259k made to an earlier period.
• HMRC argued that fees charged by the client company
constituted a taxable supply, but the client countered this
by arguing that they qualified for an exemption
• The case proceeded to Tribunal where the appeal was
upheld, resulting in the Assessment being removed and
the adjustment being reversed.
• The case was concluded in 2012 after costs of £46k had
been reimbursed under the policy (including the costs of
an external specialist).
Income Tax Enquiry claim
• HMRC opened an aspect enquiry in 2011, looking into a
claim of £210k for Doubtful Debts.
• HMRC argued that because the client had not started
legal action to recover the debt and had identified round
sum payments from the customer on the bank
statements, that the debt was not in fact doubtful, and
proposed to disallow 100% of the claim.
• Taxwise Services Ltd provided consultancy advice to the
accountant, believing that there was merit in arguing the
case further.
Income Tax Enquiry claim
• After reaching an impasse with HMRC, Taxwise
recommended following HMRCs Alternative Dispute
Resolution (ADR) route, which was ultimately successful,
with the claim being allowed in full.
• The accountant’s costs, circa £1k, were met in full.
• The Taxwise advice was not chargeable to the
accountant, fess were recovered from the underwriter.
Cross Tax Compliance Check claim
• HMRC Enquiry opened into a high profile football agency
and promotion’s company in 2009. Each subsequent
year’s Return has also been taken up for enquiry.
• Due to the complexities of the case the enquiries have
become protracted, and although some errors and
adjustments have come to light during the course of the
enquiries to date, these have been viewed as immaterial
and as such, the accountant’s costs have been covered
in full.
• This claim has now reached the limit of indemnity offered
by the policy, £75k.
Why offer FPI?
• Income generation
• Full recovery of fees
• Client retention/Client service
• Best practice
Why offer FPI?
• Tax & VAT advice line
• Employment Law and H&S advice line
• Corporate Recovery advice line
• Business Support – legal advice line
Why Taxwise?
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Largest provider
Underwriting arrangements
Taxwise On-line – claims
Tailored marketing support
Administration support
Taxwise Plus policy
Innovative
SPS (sub 200 clients)
All part of the service…
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Advice lines
E-bulletins
Quarterly newsletter
Quarterly webinar
Consultancy support
No policy excesses
No policy inner limits
QUESTIONS?
• Paul Rigney – Client Support Manager
• Penny Blight – Business Development Manager
• Scott Phillips – Business Development Manager