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Ping-pong post

July 10, 2013

A lot of the work of a tax advisor involves correspondence with HMRC. Tax returns are filed, and HMRC rightfully make the enquiries they feel fit. And then the advisor replies.

Yesterday, two colleagues came to me for advice on some difficult correspondence. They only had part of the information needed to respond, and they weren't happy with their draft response, and wanted advice: it was good enough (in the sense accurate) to send, but was it good enough?

 

Once I had sufficient familiarity with the subject matter, I asked The Ultimate Question: 'if you were the intended recipient, the Inspector (who has made legitimate enquiries), would you be sufficiently happy with our response that you would close the case?' If not, then there may not be much merit in sending the proposed response: maybe it is out of necessity, but often there is a better way.

Similar questions to ask are 'if you were the Inspector, what would make you satisfied that the taxpayer's treatment was acceptable'; 'or, what would you wish to know to be satisfied'.

In the current instance, my advice was to work with the client and document in full the background to the matter, and set out, being frank about what is not known, the merits and reasons for the claim. This was fact specific, because from the facts which were known, the treatment seemed justified, but the gaps in information made the enquiry legitimate. Putting yourself in the recipient's shoes can be a very valuable technique to employ; the aim of replying is not to have a further round, but to narrow or close matters down.

 

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