To provide a small antidote to the gloom of the pandemic, Tony Monger proffers a light-hearted approach to handling your relationship with HMRC.
We have all had that nagging feeling in the back of our mind that something might just not be working out. The relationship is just not right and, after what seemed like an amicable beginning, things have gotten ever so frosty. You don’t see eye to eye anymore and everything is viewed with mistrust and through a lens of negativity.
Then you have a massive argument and end up in court. Lawyers become involved and you walk past each other at the hearing avoiding eye contact (well, these days you might ask for their video to be turned off).
Something went wrong somewhere but you just can’t put your finger on where and when. You didn’t want this to happen, you were just trying to do your best – but what could have been a happy, long-term relationship has somehow turned very sour.
Yes, it can be difficult and painful enough to fall out with your husband/wife/partner or domestic companion. But when you fall out of love with the Taxman, the outcome can be even more devastating.
Unfortunately, when you break up with your partner you can at least hope that you might never see them again. With the Taxman, that is not so easy. He is going to expect you to write at least once a year – with a tax return – or even more frequently if you are submitting VAT returns or monthly PAYE returns. He may even want to drop in now and then to look at your records. If your relationship has deteriorated into outright conflict, this is all going to be painful and costly. So, taken all in all, it makes good sense, to stay on good terms with the Taxman.
Here are a few tips on how to keep that relationship with the Taxman in good shape.
Firstly, when he writes to you, it makes good sense to try and respond in a timely manner. Be courteous. Be honest, and ensure you share the details you need to. But take things slow and don’t open up about things that are better left unsaid or do not need to be mentioned. Being an open book is not for this relationship, you will just get too many questions in return and be viewed with suspicion throughout.
When he phones you, answer the phone or call back. Then take the time to make a full and contemporaneous note of what was discussed, with whom and when. This can help to avoid disagreements further on.
If there is ongoing dialogue – otherwise referred to as an audit or enquiry – set your boundaries and ensure you keep a record of what has been said and agreed; namely who exactly is going to do what and by when. Define clear responsibilities and set the direction of travel in this relationship. You both know this may be no more than a brief fling but neither side wants to deal with too much angst – and ensuring that you both understand the rules throughout can help to minimise any pain when it’s all over.
Inevitably, things may get tense on occasions and, as with all relationships, you will be bound to have your disagreements.
When things get tough seek specialist counselling and talk to those who have been there, done it and wear the T(ax investigation)-shirt. A caring and wise shoulder to lean on in tough times is what you need. Do not resort to alcohol – it may give temporary comfort but invariably does nothing more than cloud your judgement while emptying your wallet.
When it is time to go your separate ways and you decide to document the separation agreement, make sure it is within the law and that you set out clearly what is being agreed. If this cannot be done amicably then ask the Taxman for a detailed explanation of his views – why exactly does he feel this way? Does he think your income has been understated or your expenses overclaimed? What are his reasons? As in all disputes, it is better to get the other side to set out their view and to then respond by proactively setting your views out in writing. Be clear and concise and state clearly why you think you are right and he is wrong.
Play it straight
It may be that you and the Taxman can reach a compromise, but if you really can’t reach an agreement, you can insist that the Taxman asks one of his friends to carry out a review of his decision. It may be that the reviewer concludes that the Taxman was in the wrong (yes, really, this does sometimes happen!). But if, as expected, you do not receive a truly independent review then you can advance strategically to formal proceedings.
If you are going to Court (in this case the Tax Tribunals) seek counsel or an advocate to represent you and to present your case in a concise and factual manner, highlighting any particular indiscretions from the other side. However, whatever you do, play absolutely fair and play it straight. As in any divorce, dishonesty will result in severe punishment.
Obviously, one hopes that your relationship will not break down and, while we will not pretend that you will enjoy a long-lasting relationship with the Taxman, we can at least hope that you can learn to tolerate each other. With an ex-spouse or partner, you might be able to avoid seeing them, but with the Taxman it can be a bit more difficult. Your only hope of avoiding any future contact with him might be to emigrate – and no break-up is worth that!
• Tony Monger is a Director in Mazars Tax Investigations team. He can be contacted on 07989 352 991 or firstname.lastname@example.org