‘The CCAB have stressed the fact that meetings with the Inspector can be expensive to clients; the Revenue are well aware of this and have brought it to the notice of Inspectors. However, the Revenue consider that face-to-face contacts between Inspectors, taxpayers and accountants have a definite and necessary place in any system of accounts examination. They point out that ultimately the responsibility for supplying correct and complete information rests with the taxpayer, not with the accountant, and that the Inspector must have the facility to test this at first hand if he thinks this to be necessary and if the accountant concerned cannot satisfy the Inspector. The Revenue ask all to bear in mind too that interviews can often save time and effort on both sides and may thus work to the taxpayers advantage in the long-run.
The CCAB is not opposed to such meetings in principle if the accountant concerned cannot satisfy the Inspector. The CCAB made the point, however, that in the interests of all parties it is advisable to clear the ground beforehand by way of the initial ‘exchange’ with the accountant if only to establish facts within the knowledge of the accountant and what information, if any, would be best obtained by the Inspector seeing the client.
The Revenue do not dissent from this opinion but have said that in a very large number of small cases it should not be necessary to go through elaborate preliminaries (that is, what might be described as the ’20 questions’ approach) which can add to the time and expense necessary to settle the liability; however, the accountant must be given the chance of satisfying the Inspector before any meeting with the client is arranged.
Here again there is considerable scope for satisfactory working practices to develop by local arrangement.’
The question was taken up again at a further meeting in June 1978. The following paragraphs from the notes of that meeting were issued to accountants as Technical Release 309 (TR309) in September 1978.
‘As regards interviews, the Revenue repeated their views as follows –
- Interviews are usually informal and conducted on the basis of consent after preliminary consultations with the taxpayer’s professional adviser – normally an accountant. An interview is usually the most economical and reliable way of establishing facts within the taxpayer’s knowledge which have a bearing upon his tax liability.
- The taxpayer’s adviser is invariably encouraged to be present. If the matter of recording the interview arises it is left to the agreement of the parties concerned. The Revenue said that it was not their intention that Inspectors should demand interviews or records without giving some reason or, in most cases, making some preliminary enquiries about the quality of the records, the accuracy of their contents and the extent of the work done by the accountant. At the same time it could not be expected that a detailed list of questions would be given in advance for answer at an interview. The CCAB said they had no objection to interviews taking place or records being provided so long as the Inspector acted in a reasonable way in making his requests and gave the accountant an opportunity of satisfying the Inspector at the initial stage.
The Revenue said it was their experience over the eighteen months since the scheme started that it had not often been possible for the Inspector to be satisfied without seeing the taxpayer, mainly because in view of the methods of selection the cases taken up for investigation had unsatisfactory features. In such circumstances an early interview with the taxpayer was usually the most satisfactory and economical way, for both parties to achieve a speedy settlement to, or closing down of, the examination of the accounts. In practice attempts to clear the enquiry by correspondence usually had the effect of increasing costs because of the eventual need to see the taxpayer anyway. The Revenue accepted the fact that in some instances accountants might feel aggrieved by the Inspector’s persistence but pointed out that whether or not the Inspector was satisfied was, in the last analysis, a matter for his judgement.
In this connection the Revenue felt that there had been some selective use by accountants of passages in TR246 as a means for claiming that there was no need for the client to attend an interview with the Inspector and asked that the document be read as a whole and as background to the speech of the Chairman of the Board of Inland Revenue of 18 October 1976.
The CCAB agreed that, where the accountant was passing on information supplied by the client without having imposed the same tests upon its accuracy as might be expected from an Inspector making an ‘in depth’ examination, the accountant would not normally be in a position to resist a request for an interview with the taxpayer; but they considered that in cases where the accountant could demonstrate this an interview should not be necessary.’