Tax Investigations and Coronavirus

For taxpayers involved in current HMRC investigations and enquiries including requirement to correct penalties or Code of Practice 9 investigations how does the COVID-19 crisis affect your situation?

It’s early days yet and it is to be hoped that more formal and definitive Coronavirus guidance will be published by HMRC and the courts and tax tribunals as soon as possible. But in the meantime you may find this information that I have found helpful as a guide to where we currently are.

I also set out below HMRC’s revised guidance on:

[1] the statutory residence test published on 23 March 2020 which confirms that days spent in the UK due to coronavirus/COVID-19 will be regarded as being caused by exceptional circumstances and ignored; and
[2] the procedure for stamping share transfer forms and the payment of Stamp Duty while the COVID-19 measures are in place.

HMRC Tax Investigations and COVID-19

At the moment senior HMRC investigators running tax investigations are awaiting formal guidance from above on whether to offer time extensions to taxpayers under investigation who are subject to deadlines for the provision of information such as penalty calculations, statements of assets and liabilities, copy invoices, accounts, bank statements etc. Informally, I have been told that HMRC investigators will not be insisting on deadlines being met and will offer reasonable extensions of time and asking taxpayers to do the best they can in the circumstances. HMRC accept that if a taxpayer is either ill with coronavirus or self-isolating it would not be reasonable for them to visit business premises for example in order to obtain copies of documents subject to a Schedule 36 information notice. However, if it was reasonable to get someone else to obtain that information on the taxpayers behalf then they would expect that to happen.

This relaxation which I stress is purely informal at the moment, is subject to an important exception. The exception is where HMRC assessing time limits are about to expire, for example where the four year period for issuing a discovery assessment is rapidly approaching or where HMRC are concerned about the solvency of a taxpayer or there is a risk that the taxpayer will dissipate their assets leaving little or nothing for HMRC to recover. In such cases I understand that HMRC will understandably do whatever is necessary to protect the revenue and secure their position.

The best thing that taxpayers under HMRC investigation but affected by Coronavirus can do is for the taxpayer or their adviser to contact the officer at HMRC running their case and explain the difficulties they face and request some leeway in complying with undertakings and deadlines. This will assist HMRC by keeping them in the picture and allow HMRC to formally agree extensions of time. I have done this on behalf of clients under tax investigations in the last few days and this contact has been welcomed and met with a willingness on the part of HMRC to make allowances for COVID-19 affected clients.

Courts and Tax Tribunals

For taxpayers involved in tax appeals to the courts and tribunals and wondering if their cases will go ahead the following guidance was published by the Chancery Bar Association on 25 March 2020:


Statutory Residence Test

HMRC have published the following guidance on when extended stays in the UK due to COVID-19/coronavirus can be ignored for the purposes of the statutory residence test day-count:

This guidance does not however deal with the situation where the taxpayer concerned stays in the UK to care for a family member or close or essential business colleague with coronavirus or coronavirus symptoms. I expect that such cases will be dealt with on a case by case basis and affected taxpayers should compile and retain as much supporting evidence as possible.

Share Transfer Stamping

HMRC’s revised guidance for dealing with the stamping of share transfer forms and the payment of Stamp Duty during the coronavirus measures can be found here and also here.

How I can assist you

If you are affected by Coronavirus/COVID-19 and have an HMRC investigation including enquiries relating to requirement to correct penalties or a COP 9 enquiry or have a tax appeal hearing coming up or need to obtain directions from the tax tribunal such as permission to extend time limits or rearrange a hearing, please contact me using the contact form below to discuss how I can assist you.

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For professional and insurance reasons Patrick is unable to offer any advice until he has been formally instructed.