HMRC letter re flat-rate VAT scheme

[SueEllen]

However, the account is not providing any advice to me on how best to answer the questionsand it seems they will just pass my replies straight through to HMRC. I called the accountant to get some context and their view is it's a way of HMRC delaying the VAT registration process because of overload - surprised to hear this, considering it's from a fraud investigation dept.

Unfortunately I think you will need to pay a tax solicitor to write the answers for you with your agreement to nip any potential investigation in the bud.

[malvolio]

Depending what tax investigation insurance you have I would contact the insurer BEFORE answering the questions.

This ^ - assuming you have some, it's time to get your money's worth and cut HMRC off at the knees

[TheCyclingProgrammer]

I'm surprised your accountant bothered signing you up for the FRS - assuming you're just a normal IT contractor - I suppose it might not be too bad when the new changes come in with the 1% first year discount (if that even still applies) but otherwise a waste of time.

[malvolio]

This ^ - assuming you have some, it's time to get your money's worth and cut HMRC off at the knees

Having read them again, the questions are nothing to do with VAT and you are in line for an investigation. Don't answer anything without professional advice: every IR35 case that's been lost has been on the back of a contractor going it alone.

[RonBW]

Having read them again, the questions are nothing to do with VAT and you are in line for an investigation. Don't answer anything without professional advice: every IR35 case that's been lost has been on the back of a contractor going it alone.

Couldn't agree more - this isn't a VAT question, this is a forerunner to an in depth investigation of working practices and whether you are paying the "right" level of tax.

DO NOT REPLY TO THIS YOURSELF. If you have IPSE membership then get on the phone to them NOW. If you have Qdos insurance, check with them at what stage they get involved in the process. If you have neither then I would contact Abbeytax and ask them for advice and a quote to represent you. DO NOT ATTEMPT TO ANSWER THE QUESTIONS WITHOUT TAKING PROFESSIONAL ADVICE FIRST.

[teapot418]

I agree - the advice to answer these questions yourself is extremely poor advice IMO. Get an expert (QDOS/AbbeyTax) opinion. If you have IPSE+ or QDOS PEI, it should cover this.

[PurpleGorilla]

Eek! Good luck with it.

[eek]

Having read them again, the questions are nothing to do with VAT and you are in line for an investigation. Don't answer anything without professional advice: every IR35 case that's been lost has been on the back of a contractor going it alone.

Don't forget he's only been going a few weeks - so this has zilch (probably) to do with IR35. However he does need those questions answered appropriately.

These questions look related to the reason behind the 16.5% VAT change which is targeting the current approach (seen in health work and elsewhere) of creating a company for every 3-5 employees to maximise VAT savings and the grab Employers NI allowances - and if you look at those questions with that in mind those questions make sense...

[malvolio]

Don't forget he's only been going a few weeks - so this has zilch (probably) to do with IR35. However he does need those questions answered appropriately.

These questions look related to the reason behind the 16.5% VAT change which is targeting the current approach (seen in health work and elsewhere) of creating a company for every 3-5 employees to maximise VAT savings and the grab Employers NI allowances - and if you look at those questions with that in mind those questions make sense...

...but that does not negate the need to get them answered with professional advice, if only for risk mitigation.

[eek]

...but that does not negate the need to get them answered with professional advice, if only for risk mitigation.

As covered in and by However he does need those questions answered appropriately.

The thing about Paranoia is that while you may start just thinking "they are out to get me", it quickly turns into "they are out to get everyone". Hence what to me looks like an innocent new VAT inquiry based on the flat rate VAT and employers NI abuses looks to you like the beginnings of an IR35 inquiry - which based on the facts to hand makes little sense....