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SA
ENQUIRIES 4
MEETINGS
26.01.06
At
some stage in an enquiry (other than a small aspect enquiry)
the Officer is likely to ask for a meeting with the client.
Indeed in many cases they do not ask for such a meeting
they demand it. How many times have you seen "I need
to see your client", or "I require a meeting
with your client"? I normally respond along the lines
of "I do not see how you can "need" to
see my client, as, if Parliament had envisaged such a
necessity arising in the course of an enquiry it would
surely have given you the right to do so."
The
reality is that HMRC has no power to interview anyone
(apart from in connection with criminal proceedings).
It is entirely up to you and your client whether you want
to volunteer the client to attend a meeting. Parliament
has given you the right to decline a meeting. Why not
exercise that right?
In
my view, except in cases of fraud, the only reason to
accede to a request for a meeting between the Officer
and the client is that you believe that a meeting will
bring the enquiry to a speedy conclusion. Do you have
such a belief? Surely that must depend on a combination
of how you believe the client will perform at a meeting,
what you want to achieve from the meeting and what you
believe that the Officer wants to achieve from the meeting.
It is also likely to depend on the stage that the enquiry
has reached.
I
do not often agree to meetings. That is not because I
have anything against such meetings per se. It is sometimes
because I know that most clients do not relish meetings
with HMRC. It is mostly because the only thing that I
want to achieve from a meeting is to speed up the resolution
of the enquiry and I do not believe that the meeting is
likely to achieve that objective.
In
most cases your starting point ought perhaps to be what
you believe the Officer wants to achieve from the meeting.
Clearly he wants information. But what information and
why can it not be provided as easily in correspondence?
I like correspondence. It enables you to give a considered
answer. Surely giving a considered, properly researched,
answer rather than the best of the client's recollection
at a meeting is as much in the interests of the Revenue
as the client. So why should HMRC prefer the vague recollections,
and sometimes guesses, that are likely to be obtained
from a meeting?
The
only rational answers that I can think of are:
(a) that they believe that a considered answer could well
be carefully framed to obscure rather than to clarify
the facts, ie that you are dishonest;
(b) that a considered answer gives an opportunity to "create"
facts that the client believe will help his case, ie that
the client is dishonest;
(c) the client might be more amenable than you to a deal
to resolve the enquiry because he can be bullied into
believing that a lack of written evidence means that he
cannot prove the facts so he is better off to agree to
pay some tax even though he does not believe it is due
rather than to try to prove his case before the Commissioners;
and
(d) That the facts are likely to be difficult to explain
and that a face to face meeting where supplementary questions
can be posed in reaction to an answer is the most efficient
means to understand the facts.
If
I believe that the Officer's reasons are, or include,
(a) to (c) I cannot envisage a meeting being helpful to
my client unless I am confident that he will come over
so well at the meeting that his demeanour of itself is
likely to allay the Officer's suspicions. He will not
do so unless he is financially literate, has an ability
to communicate well, and has a good memory as well as
coming over as patently honest. If I believe his reason
is (d), and I share his belief, then I am happy to arrange
a meeting.
If
you decide that a meeting is in your client's best interests
there are still a number of issues you need to consider.
The first is timing. What will a meeting near the start
of an enquiry achieve? HMRC say that it will speed up
the enquiry by enabling the Officer to better understand
the business. But won't a meeting between the Officer
and you achieve that equally if not more readily? You
surely know the client's business well, particularly if
you have dealt with it for a number of years, and you
probably know better than the client what is in the accounts
that you prepared. So offer a meeting without the client
present. My experience is that such an offer is invariably
refused, so "understanding the business better"
make little sense to me if the Officer is not prepared
to let me explain it. Furthermore even if the reason that
you are prepared to agree to a meeting is (d) above, isn't
it better to clear away the other issues first, so that
the meeting can properly focus on that objective?
The
second issue is the scope of the meeting. Remember it
is your meeting, in the sense that you have the power
to decide whether or not it should take place, so it should
be held on your terms. How many business meetings do you
have without agendas? What is the agenda for this meeting?
Although it is your meeting it is going to cover the Officer's
agenda, so ask him to send that to you. I normally ask
for a detailed agenda. If I get back "I want to talk
about the operation of the business and your client's
cost of living," I normally respond that I said "detailed"
and what he has given me is too vague.
Asking
for a detailed agenda is not being awkward. You want your
client to prepare well for the meeting. How can he do
this without knowing what the meeting is going to cover?
In many cases he will need to refresh his memory. In some
cases he will need to find something out. For example
what does the Officer want under "cost of living"?
I have a rough idea how much a month I spend, but if the
Officer wants to know what I spend it on I will want to
save my supermarket bills for a couple of months to work
out the details of what I buy. If the Officer does not
tell me in advance that he wants to talk about such details,
I would not have done that research, so the meeting will
be a waste of time. In many cases if that is what the
Officer wants to talk about the client will not have any
idea what the groceries cost and will need to bring along
his wife
Secondly
most clients are busy running their businesses. Taking
two or three hours off for a meeting is disruptive, so
I want the client's time at the meeting used productively.
I do not want him to sit round while I explain to the
Officer how the accounts were prepared. I want everything
that I can answer out of the way prior to the meeting.
A detailed agenda will highlight if there are points that
don't need the client's unique knowledge. In some businesses
it will also highlight whether the Officer really needs
to talk to the proprietor of the business or whether he
should be talking to the bookkeeper, finance director,
works manager or some other staff member or members. As
a business grows the proprietor ought to know less and
less about detailed matters.
Thirdly
if the Officer wants to ask detailed questions deriving
from his examination of the records I wand the records
back in advance of the meeting, together with a list of
questions. The client cannot be expected to answer such
questions without first having an opportunity to look
at the records. Other items around the same time will
often trigger a recollection of the unexplained item.
Of
course, having got the agenda try to keep to it. If the
Officer wants to go into other areas you may need to think
on your feet. Why didn't he mention them in the agenda?
Do they arise from something the client has told him.
If so, is the client likely to know the answer or is there
a risk that he will guess it because he wants to try to
keep the Officer happy? Don't be afraid to say "That
wasn't on your agenda. It is clearly, something the client
will need to refresh his memory on and I'm not prepared
to let him answer the question now but we will respond
to it in writing when he has done the necessary research."
If necessary don't be afraid to terminate the meeting.
But let your client know in advance that could happen.
The last time I did that I had reached the door before
I realised that the client was still sitting at the Officer's
desk! Fortunately the Officer realised how unreasonable
I thought his question was and withdrew it!
Next
where should the meeting be? HMRC trains its staff in
meetings. My understanding is that such training extends
to things like who should sit where, so there is merit
in meeting in your office where the Officer has no opportunity
to prepare the scene. On the other hand I find that meetings
at HMRC offices normally work as well as those at mine
and that if I second-guess the Officer's psychology and
sit in the "wrong" place he will have to put
up with it. Clients generally prefer to meet in my office
(if only because it saves having to pay for my travelling
time) so I will normally suggest that if I am offered
a choice of venue, but unless I think that the client
is very nervous will not request it if the Officer wants
the meeting at his office. I generally prefer not to meet
on the client's premises in case the Officer sees something
that sparks a new line of enquiry, but that may well be
paranoia rather than caution.
Finally
notes. Take copious notes. Consider bringing along a member
of staff solely to take notes. The Officer is trained
in preparing notes. Also he has a headstart on you because
he will work from a list of prepared questions which will
act as a reminder when he prepares his notes. Often he
will volunteer to send you a copy of his notes. Accept
gratefully, but do not let that deter you from making
your own notes as well. If he doesn't offer, ask him for
a copy. HMRC say in COP II that you are entitled to these.
Often
when the Officer sends the notes he will send an extra
copy asking that you and the client sign these and return
them. I decline to do so, explaining that it is my firm's
policy not to ask clients to sign such notes. The reason
we adopt that policy is that signed notes are an agreement
of the meeting. Inevitably the Officer's notes are biased
as they are influenced by the issues that he regarded
as important, which is not necessarily what you regard
as important. HMRC language can also have undesirable
connotations to a lay person such as a General Commissioner.
For example, I find that client rarely "say"
anything at meetings; they "allege" things.
To me "allege" carries a connotation of doubt
as to the truthfulness. I do not want a client to confirm
that connotation! If you are in a partnership make sure
your partners follow the same policy. It will be rather
embarrassing if the Officer responds "Your partner
always signs them."
That
is not to say that if there are significant errors in
the notes you should put up with them. You should write
to HMRC pointing them out. This applies both to differences
in recollection as to what was said at the meeting and,
more importantly, to the situation where the note accurately
reflects what was said but information that has come to
light subsequent to the meeting indicates that what was
said was inaccurate. If such changes are not pointed out
promptly the objections will carry far less credibility
if they are raised some months later.
See also:
SA
Enquiries 1 - Receipt on the Opening Letter
SA Enquiries 2 - Handling Correspondence
SA
Enquiries 3 - Records
SA Enquiries 5 - Section 19A
& Para 27 Notices
SA
Enquiries 6 - Going to the General Commissioners
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January 2006 |
