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Farming & Rural Business Community

HMRC enquiries

Author: Keith Phillips, Chair of the Farming & Rural Business Community advisory group

Published: 31 Oct 2023

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Following a relatively quiet time, our group has seen a marked increase in enquiries from HMRC. Most seem targeted in two areas: property transactions and research and development claims.

The focus of property enquires seems based around returns made in a year to the Land Registry and many are in fact not properly opened enquiries but are “nudge” letters along the lines that HMRC are aware a specific client may have sold land or a property that was not shown on their tax form, giving the taxpayer the opportunity to comment.

This method does though pick up many genuine cases where a return or declaration, as such, has not been required. Examples being sale of private houses and property sold via a solo trader builder, so sale declared as turnover in accounts.

The message is that HMRC are putting a lot of effort into this area so members need to be sure that clients do appropriately return property sales, as the risk of a HMRC check is, it appears, very high at this time.

The second focus members are seeing are enquiries into R&D claims. Having been criticised for the lack of scrutiny on many R&D claims, HMRC are now being criticised for their apparent over the top scatter gun approach to enquiry letters.

The facts seem to be that many claims are being enquired into, HMRC are simply ignoring the detailed reports many claims were supported by and sending out a standard letter asking over 30 detailed questions on each claim that has been made. Examples of a member receiving the same letter on several clients in a short space of time have been noted. Often it appears only the name and reference changed and, in one case, the figures and descriptions were the same on one client letter as that received on another client letter. HRMC not even bothering to tailor the claim information.

The message is clear that, if you have clients who have made claims for R&D in recent years, ensure that they retain the detailed information to support the claim as HMRC may well require it. Often clients did use bespoke agents for such claims and this may prove a challenge for some clients and advisers as they may not themselves hold all the information that might be required.

*The views expressed are the author's and not ICAEW's.