Working the Enquiry: Meetings: Decision on Reopening Earlier Years
In a meeting where the omissions are large and culpable and are likely to have occurred in earlier years, you have a timing problem as to what to do next.
Essentially your choice is between
- pressing on with the enquiry while the taxpayer is present, or
- bringing the meeting to a close, having, if possible, agreed the profits for the year of enquiry while warning the taxpayer that further investigation may be necessary.
The preference should always be for the first option unless a referral to a specialist team, such as CIF or CI, is appropriate or you feel you need to seek advice from your manager because of (say) inexperience.
Note: All referrals to specialist teams must initially go to the Evasion Referral Team (ERT). You must also follow the guidance at CH300800 about the timing of the HRA message when you suspect evasion.
It may be appropriate to telephone your local LC CIF for advice before making the referral.
There is room for considerable local discretion in agreeing profits for earlier years and the fact that as well as interest, penalties may be due does not mean that there has to be a change of computational method involving a great deal of additional work. Agreed profits may be scaled down for earlier years on broad lines. In straightforward cases where the accountant or taxpayer will accept broad methods, the aim should be to save time and expense for all parties by agreeing the revised profits for the earlier years on the spot, whilst correcting the position for the future.
You should discuss cases which might reach this position with your manager prior to any meeting EM2000+.
If you make the decision to extend the enquiry outside of a meeting, perhaps after you receive certain details, you will have to regain the initiative. Put the taxpayer and agent clearly in the picture. Tell them the direction in which you see the case going and what information you need from them. Ideally telephone the agent and follow up with a letter.