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HMRC targeting high street accountants with ‘aggressive’ nudge letters

HIGH STREET accountants are being sent aggressive letters from HMRC, informing them the taxman suspects they may be involved with tax avoidance and that their own personal tax affairs could be investigated as a result, a law firm has claimed.

According to RPC, HMRC is mailshotting accountancy firms – often small high street firms – that are carefully worded to give the impression that the accountants are assisting clients to avoid tax but without offering any evidence in support, or referring to specific clients.

One example of the HMRC letters seen by the law firm states that failure to respond could result in the firm being included in “a programme of work which is specifically looking at agents who display signs of supporting the tax avoidance industry.”

Adam Craggs, partner and head of RPC’s tax disputes team said that sending threatening ‘nudge’ letters – which use specific language to alter the way taxpayers and advisers behave – is the latest controversial step by HMRC.

HRMC is also sending ‘nudge’ letters to individual taxpayers already involved in tax disputes with the taxman.

According to RPC, the direct targeting of taxpayers who are in dispute with HMRC and are pursuing their appeals before the tax tribunals, would be considered inappropriate behaviour in any other area of litigation. .

“HMRC is essentially suggesting that these smaller accountancy firms are guilty of encouraging tax avoidance without producing any evidence whatsoever. The aggressive approach towards high street accountants is indicative of HMRC resorting to ever more desperate measures in their efforts to bring in more tax, said Craggs.

“There is a general feeling at the moment that due to the pressure they are under HMRC are pushing the boundaries of their powers, only pulling back when threatened with legal challenge, especially by way of judicial review.

“HMRC do not appear to be targeting larger accountancy firms in this way no doubt due to the fact that the bigger firms have the means to deal with such tactics. HMRC is going after smaller high street firms that are less well-equipped.”

A HMRC spokesperson said: “HMRC routinely writes to customers and agents asking them to check that their, or their clients, tax affairs are up to date. This is part of a series of communications to a limited number of agents, recorded as having a client who has been a member of a tax avoidance scheme.

“These letters serve to educate agents about the new Promoters of Tax Avoidance Scheme (POTAS) regime and encourages them to get in touch, and to clarify the extent to which they are involved in advising their clients on tax avoidance risk.

“We know from experience, many people who get involved with tax avoidance schemes later regret the time and cost of disentangling themselves. We’d rather agents advised their clients in a way that prevents their engagement in tax avoidance in the first place.”

 

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