Tractor ploughing on farmland in the UK

Case Study: Tax Investigations in the Agriculture Sector

Separating the wheat from the chaff

HMRC recently launched an enquiry into a farming business, asking for an analysis of the general farming activities, rent and rate expenses; and capital allowances computations for plant and machinery. Although HMRC are not looking at everything within the accounts, the initial cost estimate of £1,000 has already been exceeded and could easily double, subject to HMRC’s approach.

Back from the brink

A business providing agricultural workers to farmers, both directly and through a gang-master, came under scrutiny from HMRC. Although the client had correctly operated PAYE on payments to their own employees, HMRC alleged that records showed that gang-master employees had been incorrectly treated. HMRC raised assessments for the tax and NIC dating back six years, which combined with interest and penalty charges, totalled £220,000 – a figure which would have put the client out of business.

The only way to fight this case was to lodge an immediate appeal and provide a comprehensive argument to the inspector. A number of lengthy and challenging meetings took place. The representational costs for this case quickly escalated and exceeded £6,000. The outcome was a reduced assessment to a settlement of £8,000 and a business rescued because the client had the means to fight their case.

Horse trading?

When an estate manager specialising in equestrian training first came under investigation by HMRC in 2010, the original estimate for representation fees to deal with the matter was just £1,500. However, the work associated with defending the client became more involved when a subsequent enquiry examining the company’s reasons for recurring losses followed a year later.

The investigation is still continuing and representation costs have reached nearly £20,000 in fees without an end in sight. This case illustrates clearly how fighting your corner can be a costly, lengthy and time consuming matter.
Without protection, these extensive costs would fall to the business to cover and most clients would be forced to concede to HMRC on economic grounds. Our tax investigations service allows you to defend yourself and pay the correct amount of tax.
In the last year alone HMRC raised a record £23.9bn in additional tax, which is credited as a direct result of “increased activity” and investigations. Due to the risk this poses for our clients, we offer a tax investigations service to protect you from the costs of a professional defence.

The annual subscription fee to our tax investigations service enables us to provide you with full professional representation in the event of a tax or VAT enquiry, giving you complete peace of mind that should you come under investigation you will not have to concede to HMRC’s demands.

For more information or to sign up to this essential service please contact us as soon as possible.