Resolving tax disputes and tax investigations | CoP8 & CoP9/CDF | Voluntary Disclosures | WDF | Reaching Settlements with HMRC | Exiting tax avoidance schemes | Residency and domicile | Status | CIS
What does HMRC mean by “keeping proper books and records”? Most advisers will respond with “everything the accounting software package has” including wages. Those who are more old school may think “cash book, sales day book etc.”. The problem What if there are no “books and records” that have been kept other than bank statements? My client not only manufactured clothes for high street stores but also sold “the excess” to market stall traders. But he had no idea how many garments of each line he had sold to market stall traders, but he did know the price of each garment. The solution By me talking in depth to the client, asking the right questions and thinking outside the box. The client said that each and every garment had a plastic covering like you have on any clothing you retrieve from the dry cleaners. So as the covers came in bulk on a roll, it was quite easy to calculate the throughput of total garments made based on the covers used. Each roll of material could make so many garments in total. We knew how many had been sold to the high street shops and distributors, so the balance was sold to market stall traders. Also, an agreed amount was adjusted to reflect spoilage. The outcome HMRC were shown around the workshop to put everything in perspective and the calculations presented to them. The outcome was that HMRC had no alternative calculation and accepted our figures without alteration. One happy client.
