HMRC are out for Blood!

My client who has been questioned by HMRC for almost 2 years now. The initial return under enquiry was prepared by another firm. Two years of questions by HMRC.

The enquiry is in relation to capital gains tax on property disposals.

￡550,000 of capital expenditure was claimed on one property. Documentary evidence is available so far of ￡410,000 and it is going back over 15 years. HMRC are therefore attempting to disallow the ￡140,000.

The adamant client maintains that the claim is accurate and he believes he probably spent more. The problem is that my client’s record keeping is poor. We just have a box of the larger receipts and nothing else to back it up. No architect’s drawings or plans here.

We have to look at what the client could have kept in a similar situation. Did he obtain planning permission needed or building warrants?

Are there invoices that could avenues to pursue re missing paperwork?

Have you considered making enquiries with local authorities?

What about CIS records? (Could open a can of worms, albeit likely out of time)

Another long shot, client did not perhaps do before and after photos of his/her “baby”, we take a lot of pictures re our developments so it is possible some evidence might be “gathered” from similar.

The outcome will whether the inspector is having a good day and my powers of persuasion.

If the Inspector stands his ground and is not moved by my client’s plight, as he is entitled to, the client’s options are limited – the Tribunal will consider if it is likely that the amount of expenditure would have been greater than that supported by documentary evidence.

If you would like me to help with your tax issues, drop me a line.