Sunday, October 06, 2013

It's all in the tactics (part two)

Friday at a clients also involved some tactics that could partly, if tenuously, be linked to Rugby Union.

I was present for five hours because of an HMRC (VAT) compliance visit. These things can be quite stressful for a client and experience suggests that they are often at their most vulnerable if not accompanied by a responsible adult, unfortunately none were available so I attended. The day before the visit I received a call from the client and his book-keeper saying that we needed to 'get our story straight'. I said there was no story to get straight, simply the facts which were that the clients previous book-keeper had left and her replacement had discovered that the client was due somewhere in the region of £6,000 in unclaimed VAT which he was fully entitled to. HMRC internal rules state that they are not allowed to operate any computers or computer devices which are not their own, the usual procedure is to download the data onto a memory stick, load it onto the compliance operators laptop and then let the HMRC software 'interrogate' it. That's fine if the client has a well known brand of software made by a company from Newcastle but if, as in this case, the client has bespoke software, the book-keeper must operate the computer.

There were four of us: client, book-keeper, HMRC lady and myself, in the room and after the brief chat about the company and the reason for the visit  it was down to work. Or rather it wasn't. I had nothing to do except answer the occasional question, search for some paperwork and hand over my new business card. So what do you do when you have no work to do? Well, you can do one of two things and without access to a computer a few hours wasted on the Internet wasn't a possibility so the company boss and myself began to talk.

In these circumstances you can be sure that the lady from HMRC is listening out for any possible leverage but we were talking about sport and when the client mentioned a lifelong interest in Rugby Union the compliance officer's ears pricked up, they had a mutual friend in local rugby, her sons best friend turns out to be the son of my clients best friend, as an unplanned strategy it worked brilliantly. What neither of them realised is that the family in question are also clients of ours, that point went undisclosed. The conversation then moved onto other sports, the abundance of so-called 'extra curricula' activities that seem to be loaded on teenagers these days and the revelation that my client was a former Commando and also a coach for the army trampoline team. He told me some of his happiest moments were spent wearing a leotard, I told him that was a mental image I didn't need the next time we spoke on the phone. The officer choose such a small sample of paperwork to look at that what had been seen beforehand as an interrogation turned out to be a fairly convivial late morning/early afternoon - albeit an expensive one for the client in terms of my attendance, but I remained at his insistence.

The HMRC visit lasted just over four hours, my additional time was the before briefing and the post meeting discussion. What was interesting was the disclosure from the VAT inspector that it is the old tax half of the HMRC that are driving some 95% of all compliance visits and that most of these are generated from either rival companies in the same town as the company visited or from members of the public making anonymous reports. In this regard we have come full circle we really have gone back to the future, in this case the 1980's. Back then HMRC inquiries arose because of the following reasons (in order of popularity): estranged spouse/girlfriend/lover, neighbours jealous of lifestyle, rival business, problems with incorrect or late returns and finally HMRC (Inland Revenue and VAT in those days) generated intelligence.   In the case of this client the HMRC officer didn't ask about the returns which included the 'retro claim', she said that the visit was based on a random selection of VAT registered businesses who had not been the subject of a visit in the past ten years.

5 comments:

Span Ows said...

...all's well that ends well!

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