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HMRC targeting high street accountants with threatening letters

Published on 14 December 2015

HMRC broadening its focus to ordinary high street accountants

HMRC are mailshotting aggressive letters to high street accountancy firms informing them that HMRC believe they, or their clients, may be involved in tax avoidance and threatening the accountants that failure to confirm the position may lead to HMRC investigating their own personal tax affairs, says City law firm, RPC.


RPC explains that HMRC are sending letters to 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 to the letter could result in the accountancy 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 says that what is particularly surprising is that these threatening letters are being sent to traditional high street accountancy firms rather than tax planning boutiques.


RPC explains that sending threatening ‘nudge’ letters to accountancy firms is the latest controversial step by HMRC to influence the behaviour of taxpayers and their advisers, as they strive to increase the tax yield.


‘Nudge’ letters use specific language, often designed by behavioural psychologists, to alter the way taxpayers and their professional advisers behave in an effort to persuade taxpayers and their advisers to behave in a manner which meets with the approval of HMRC.


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


RPC says HMRC’s direct targeting of taxpayers in this way who are in dispute with HMRC and who are pursuing their appeals before the tax tribunals, would be considered inappropriate behaviour in any other area of litigation. Many taxpayers find these ‘nudge’ letters intimidating. Normally HMRC would send correspondence relating to litigation to the lawyer representing the taxpayer rather than directly to the individual concerned.


Adam Craggs, comments: “HMRC are now using aggressive letters to specifically target high street accountants that do not always have the resources necessary to deal effectively with such threats.”


“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 for the Chancellor.”


“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.”