Nunn Hayward - July 2005

Abacus July 2005

Inland Revenue About To Send “Threatening” Enabling Letters To Many Businesses

Last Year

Last year businesses with a turnover of less than Ł15,000 received unsolicited mail from the Inland Revenue reminding them of their tax obligations and the penalties, fines and interest that would be brought down on high from the Revenue if they did not lay bare their souls in the next tax return.

May to August 2005

This year we have a new merged HM Revenue and Customs (HMRC). We have recently been advised that “small businesses” with turnovers of up to Ł150,000 will receive a similar “enabling letter”.

What HMRC say the letter is: -

Sent out based on turnover and prior “risk profiling” by HMRC.
A summary of key expenses/issues an inspector in general looks closely at.
A reminder to ensure your records are accurate.
A reminder of the penalties and interest that HMRC will seek to impose if errors are made.

What HMRC say the letter is not: -

An enquiry into your tax affairs.
An indication your affairs will now be automatically reviewed in greater detail.
An indication that your (or your advisors) have done anything wrong!

Our professional bodies do not support this strategy.

It raises anxiety unnecessarily with the business community.
It causes confusion as to the commencement of an enquiry (formerly investigation).
And however unfounded can sow seeds of doubt as to advice from the advisor.

So Why are HMRC sending “Enabling Letters” to a Wider Audience?

Reports are now surfacing that the HMRC experienced a higher profit in targeted cases last year. Therefore, regardless of what is written as to motives in their letters, we consider this must be one of their main motives, if not their main motive!

Recommended Action

We at Nunn Hayward are advising our clients as follows: -

If a letter is received ……… Don’t Panic (to quote a phrase from the latest block buster!)
Let Nunn Hayward know you have had a letter – so that we can take control.
Ensure an agreed timetable for accounts preparation and our usual meetings are agreed at an early date.
Nunn Hayward will explain and discuss individual action on expenses and disclosure to the Revenue.
Ensure that Fee Protection Insurance is taken out as despite the assurance from HMRC; a list has been compiled to send letters and an increased profile with them is likely.

We hope that forewarned is forearmed but if you are at all concerned please do not hesitate to call your normal contact or Steve Cook, Tax Partner at steve@nunn-hayward.com or 01753 888211.

Important Tax Dates

31 July	–	Second self assessment payment on account due for 2004/05
	–	Liability to 2nd Ł100 fixed penalty arises if 2004 Tax Return not filed
	–	Additional 5% surcharge on any underpaid tax for 2003/04 imposed

2 Aug	–	Last day for notifying car changes in quarter to 5 July - P46(car)

31 Aug	–	Annual adjustment for VAT partial exemption calculations (May VAT year end)

Please contact us to discuss the above further

Tel: 01753 888211 Fax: 01753 889669 Email: abacus@nunn-hayward.com
Nunn Hayward, Sterling House, 20 Station Road, Gerrards Cross, Bucks SL9 8EL.

Chartered Accountants, Registered Auditors and Insolvency Practitioners. This publication has been prepared as a guide only to topics of current financial and business interest. It is not intended to be a substitute for professional advice. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this publication can be accepted by either the authors or Nunn Hayward. All rights reserved.

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