Mike says it all started with 'the dreaded question'. When someone who knows you are an accountant (or in his case a VAT lecturer) asks for your help in resolving a tax problem that requires knowledge and experience way outside your comfort zone. As Mike says, it's because people tend to assume that accountants know about all things tax, just like they assume that doctors know about all things medical.
Mike describes himself as "A VAT lecturer who prepares a few personal tax returns each year - I have never dealt with disclosure and settlement of underdeclared liabilities." He then asks himself a key question: "Should I simply pass [this] on to someone else?"
When I read this my mind immediately went back to a key paragraph in the Guide to Professional Conduct in Relation to Taxation'. (I sit on the pan professional body working party that is updating the 2004 version for the ICAEW, CIOT and 5 other professional bodies):
“Members will from time to time find themselves having to advise on matters which require specialist knowledge. In such circumstances they should be careful not to go beyond their own level of competence and, if necessary, should seek help from a specialist in the field”.Mike complied with this advice and sought the input of a friend who chairs the tax investigation service at Baker Tilly, a top ten firm of accountants.
I've summarised below some of the key lessons drawn from Mike's article:
- "Do not do this by yourself if you have no experience" - This accords with the Guidance above and was the recommended advice given to Mike by John Newth;
- "Find someone who knows what to do. The client may baulk at the level of fees, but it is likely to be worth it in reduced trouble and penalties"
- "What was unfamiliar to [Mike] was routine to someone who works in investigations."
- You need to address the underpayment of Class 2 NICs totally separately to the underpaid income tax and Class 4 NICs which were to be covered by the main settlement.
- The relative speed of securing a full settlement with maximum mitigation of penalties when you know what you're doing.
For others faced with similar situations I would suggest that the independent tax investigation specialist members of the Tax Advice Network should be your first port of call.