Tedious HMRC

Old Aug 21st 2018, 1:40 am
  #1  
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Default Tedious HMRC

This is a cautionary tale - I thought it couldn't possibly happen that HMRC might investigate me as I play by the rules and my tax position is quite straightforward - but they did! And although I managed a complete victory (i.e. I had to pay no extra tax at all) it was a major hassle.

The background is that I filed one of my previous tax returns by myself to "save time" (!) and made a couple of silly but trivial errors. This caused HMRC to (reasonably) ask for clarification, which I gave (with no change to the amount of tax owed which was nil).

Annoyingly HMRC obviously thought they were onto something because I was pretty close to some of the residency thresholds etc, so they went on a massive fishing exercise asking me to produce all my travel records including travel times, account (with evidence) for every hour that I worked for the entire year both overseas and in the UK, including trying the "airport travel time" trick etc plus a number of other things. Luckily I did have (or could obtain) all the requested information and after numerous follow up questions and spending I suspect way more than 50 hours over 8 months, they have finally issued a notice of conclusion accepting that I still owe no tax.

My conclusions from the process:

- don't think it won't happen to you - it might! And take HMRC very, very .... VERY seriously. They do not mess around.
- do use a good tax advisor and make sure you file your tax returns on time and accurately
- understand the rules and make very sure you don't accidentally break any of the various limits (e.g. days in UK / days working in UK / record travel time properly / pay tax on UK source income where relevant)
- If at all possible, do not go close to any limits as it's incredibly easy to make a small mistake that tips you over the edge and HMRC can come up with some ingenious ways of challenging your records.
- keep accurate records that are easily accessible and defensible
- think about what HMRC could ask you to produce or obtain from third parties othat might undermine your own records (e.g. work diaries, holiday records, mobile phone records, etc etc) and do not try to cut any corners!
- HMRC can ask very sharp and tricky questions so be very careful when replying.
- if you do get investigated, expect tons of annoying follow up questions even if the initial questions are trivial.
- There is light at the end of the tunnel (eventually)!

I'm sure this is mostly captain obvious stuff, but I just wanted to share my experience in case it helps others in the same position. Anyone else out there enjoyed a similar experience?

Last edited by FriendlyExpat; Aug 21st 2018 at 1:44 am.
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Old Aug 21st 2018, 6:26 am
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Default Re: Tedious HMRC

Originally Posted by FriendlyExpat View Post
This is a cautionary tale - I thought it couldn't possibly happen that HMRC might investigate me as I play by the rules and my tax position is quite straightforward - but they did! And although I managed a complete victory (i.e. I had to pay no extra tax at all) it was a major hassle.

The background is that I filed one of my previous tax returns by myself to "save time" (!) and made a couple of silly but trivial errors. This caused HMRC to (reasonably) ask for clarification, which I gave (with no change to the amount of tax owed which was nil).

Annoyingly HMRC obviously thought they were onto something because I was pretty close to some of the residency thresholds etc, so they went on a massive fishing exercise asking me to produce all my travel records including travel times, account (with evidence) for every hour that I worked for the entire year both overseas and in the UK, including trying the "airport travel time" trick etc plus a number of other things. Luckily I did have (or could obtain) all the requested information and after numerous follow up questions and spending I suspect way more than 50 hours over 8 months, they have finally issued a notice of conclusion accepting that I still owe no tax.

My conclusions from the process:

- don't think it won't happen to you - it might! And take HMRC very, very .... VERY seriously. They do not mess around.
- do use a good tax advisor and make sure you file your tax returns on time and accurately
- understand the rules and make very sure you don't accidentally break any of the various limits (e.g. days in UK / days working in UK / record travel time properly / pay tax on UK source income where relevant)
- If at all possible, do not go close to any limits as it's incredibly easy to make a small mistake that tips you over the edge and HMRC can come up with some ingenious ways of challenging your records.
- keep accurate records that are easily accessible and defensible
- think about what HMRC could ask you to produce or obtain from third parties othat might undermine your own records (e.g. work diaries, holiday records, mobile phone records, etc etc) and do not try to cut any corners!
- HMRC can ask very sharp and tricky questions so be very careful when replying.
- if you do get investigated, expect tons of annoying follow up questions even if the initial questions are trivial.
- There is light at the end of the tunnel (eventually)!

I'm sure this is mostly captain obvious stuff, but I just wanted to share my experience in case it helps others in the same position. Anyone else out there enjoyed a similar experience?
Hi !

As I also skirt quite close to the limits - where you in the UK close to 90 days or just over 45?

Thanks, Millhouse
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Old Aug 21st 2018, 7:25 am
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Default Re: Tedious HMRC

They are tax collectors.
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Old Aug 21st 2018, 8:35 am
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Default Re: Tedious HMRC

Originally Posted by Millhouse View Post
Hi !

As I also skirt quite close to the limits - where you in the UK close to 90 days or just over 45?

Thanks, Millhouse
I was close to both the "90 UK midnights" limit (something like 87...) and 30 "UK working days" limit (27 ish...)
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Old Aug 21st 2018, 8:43 am
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Default Re: Tedious HMRC

Originally Posted by FriendlyExpat View Post
I was close to both the "90 UK midnights" limit (something like 87...) and 30 "UK working days" limit (27 ish...)
ah ok.... I'm just doing mine and I expect to be at around 47 days. I never work in the UK - everything is holiday
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Old Aug 21st 2018, 3:10 pm
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Default Re: Tedious HMRC

Originally Posted by FriendlyExpat View Post
This is a cautionary tale - I thought it couldn't possibly happen that HMRC might investigate me as I play by the rules and my tax position is quite straightforward - but they did! And although I managed a complete victory (i.e. I had to pay no extra tax at all) it was a major hassle.

The background is that I filed one of my previous tax returns by myself to "save time" (!) and made a couple of silly but trivial errors. This caused HMRC to (reasonably) ask for clarification, which I gave (with no change to the amount of tax owed which was nil).

Annoyingly HMRC obviously thought they were onto something because I was pretty close to some of the residency thresholds etc, so they went on a massive fishing exercise asking me to produce all my travel records including travel times, account (with evidence) for every hour that I worked for the entire year both overseas and in the UK, including trying the "airport travel time" trick etc plus a number of other things. Luckily I did have (or could obtain) all the requested information and after numerous follow up questions and spending I suspect way more than 50 hours over 8 months, they have finally issued a notice of conclusion accepting that I still owe no tax.

My conclusions from the process:

- don't think it won't happen to you - it might! And take HMRC very, very .... VERY seriously. They do not mess around.
- do use a good tax advisor and make sure you file your tax returns on time and accurately
- understand the rules and make very sure you don't accidentally break any of the various limits (e.g. days in UK / days working in UK / record travel time properly / pay tax on UK source income where relevant)
- If at all possible, do not go close to any limits as it's incredibly easy to make a small mistake that tips you over the edge and HMRC can come up with some ingenious ways of challenging your records.
- keep accurate records that are easily accessible and defensible
- think about what HMRC could ask you to produce or obtain from third parties othat might undermine your own records (e.g. work diaries, holiday records, mobile phone records, etc etc) and do not try to cut any corners!
- HMRC can ask very sharp and tricky questions so be very careful when replying.
- if you do get investigated, expect tons of annoying follow up questions even if the initial questions are trivial.
- There is light at the end of the tunnel (eventually)!

I'm sure this is mostly captain obvious stuff, but I just wanted to share my experience in case it helps others in the same position. Anyone else out there enjoyed a similar experience?
Interesting story ! ..... surprised you didn’t mention any of this when you were posting about tax back in March

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Old Aug 21st 2018, 4:00 pm
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Default Re: Tedious HMRC

Always good advice to never cut corners and get professional help if you need it.

Keeping a track record of evidence such as old visas/passports, phone bills, tenancy contracts etc really helps you when they do ask.

Sometimes they pick a file at random and do extra scrutiny so always assume it can happen to you!

N.
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Old Aug 21st 2018, 5:52 pm
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Default Re: Tedious HMRC

What are the penalties now for mistakes? Is it 100% of the owed amount of tax - or is it so much for every year after mistake? Even that is complicated.
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Old Aug 22nd 2018, 12:03 pm
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Default Re: Tedious HMRC

Originally Posted by UKMS View Post


Interesting story ! ..... surprised you didn’t mention any of this when you were posting about tax back in March

:-)

I was being very cautious (paranoid?) and didn’t want to post anything about myself that HMRC could possibly find while the enquiry was active, even if the odds were very remote.
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Old Aug 22nd 2018, 12:08 pm
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Default Re: Tedious HMRC

Originally Posted by Sabi Star View Post
What are the penalties now for mistakes? Is it 100% of the owed amount of tax - or is it so much for every year after mistake? Even that is complicated.
The law is changing this summer so the penalties for expats can be even more than 100% in some cases. It can be a bit scary!
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