Care should be taken with the response to a request from HMR&C for records and a case should be made out for not supplying the appointment book and diaries on the grounds that they are not factual business records used for the completion of the return.

If you do decide to submit them make the investigator aware that he should not place undue reliance on them as they cannot be relied upon to give an accurate record of the events.

Someone may not have called resulting in no sale and on the other hand you may have made a sale to someone not entered in the diary.


Bank accounts

I never understand why people have several bank and building society accounts yielding very small amounts of interest. In an HMR&C investigation it only complicates matters.

Transfer funds between accounts and close all unnecessary accounts. It goes without saying that you should obtain all statements and retain them in a safe place.


Keep ahead of the game

You can prevent Investigations by keeping an eye on your accounts, such as the gross profit rate. Is it in line with that achieved by your competitors?

Do not forget HMR&C has this information. HMR&C will also compare the figures for this year with those of previous years. Look at ratios other than the gross profit rate e.g. debtors to sales, percentage increase in sales, has turnover kept pace with inflation?



The return on death made by the solicitor handling the estate for inheritance tax purposes is available to HMR&C and is reviewed as death is the last chance to ensure that all liabilities have been paid. It can be very profitable for HMR&C.


Offshore accounts

Monies used to be held in offshore accounts to avoid taxation. Following the recent disclosure opportunities and attacks on money laundering, banks overseas now either deduct tax at source or notify HMR&C of the interest arising which discloses the existence of the account.


Accountants must inform on you

Accountants now have a legal obligation to inform if they are aware of irregularities with your affairs or using their experience have reason to believe there could be something wrong.


Fiscal nomad

As transport improves and becomes cheaper the world becomes a smaller place, it is easier to become not resident in any one country. There is now an obligation on HMR&C to pin point the place of residence.

Previously they said if you did not prove where you were resident, you were resident in the UK.



Always report theft to the police so there is at least that to counter HMR&C allegations. I know they are unlikely to do any thing but at least you will have a crime number.


Capital statements

In any substantial Investigation do capital statements as early as possible. That will cost in professional fees but will save cost in the long term and will enable matters to be brought to a much quicker solution saving a lot of stress and hassle.


Adjustments to accounts and computations

When I was an inspector these adjustments were common but rarely interest and penalties were added to the resulting tax liability. Now that HMR&C is statistically driven beware.


Low profile

HMR&C has limited resources. So do not attract attention to yourself.

File your accounts and returns on time. Make sure there are no unusual items in the figures, e.g. watch the gross profit rate; make sure the returns are completed properly.


ATM machines

It has been known for these machines to trap you as they can pinpoint your location at a particular time and just imagine you had said you were abroad on the date a withdrawal was made.


Peter Clare

The Poacher turned Gamekeeper


This information has been honesty written with a view to helping you: I am, like most people, not perfect and I apologise for any in corrections. I cannot be held responsible for any consequences of you using the information unless I have been made aware of the full facts of the matter and have expressed an opinion thereon.