Coronavirus: UK places temporary halt on routine tax investigations

Out-Law News | 08 Apr 2020 | 12:38 pm | 2 min. read

The UK's tax authority has put routine tax compliance checks on hold as a result of the coronavirus pandemic, according to letters being sent by HM Revenue & Customs (HMRC) to some of those currently the subject of an investigation.

The letters explain that investigations will be put on hold, unless taxpayers contact HMRC asking them to continue work. However, the letters explain that HMRC may need to make contact with the taxpayer if they have reached a legal deadline for sending something to the taxpayer.

“In addition to social upheaval, the COVID-19 pandemic has triggered almost unprecedented levels of volatility in the economy and financial markets over recent weeks and HMRC, whose core functions include not only the collection of taxes but the payment of reliefs, is central to delivering many of the numerous and rapidly introduced measures outlined in, and since, the budget. These letters appear to be aimed at relieving non critical financial burdens on individual and corporate taxpayers alike," said Andrew Sackey, a tax investigations expert at Pinsent Masons, the law firm behind Out-law.

"It’s worthy of note that none of the new letters appear to relate to the work of the Fraud Investigation Service, which is likely to be maintaining its core investigatory work and stepping up its activities to combat scams, targeting those seeking to improperly profit from the new and untested measures announced by the chancellor,” he said.

Earlier this week HMRC published an alert warning staff returning to the NHS to help with the coronavirus pandemic that they are being actively targeted by promoters of tax avoidance schemes. HMRC warned that unscrupulous agencies or umbrella companies are seeking to sign up returning NHS staff by tempting them with arrangements that they claim to be legitimate, tax efficient ways to allow the contractor to take home as much as 85% of their gross salary and reduce their paperwork, without explaining the risks associated with the scheme.

Coronavirus has also affected hearings before the tax tribunals. All proceedings in the First-tier Tribunal (FTT) are stayed for a period of 28 days from 24 March 2020 and all time limits in any current proceedings are extended by the same period, according to a practice direction issued by the president of the tax chamber of the FTT. This is subject to any Directions issued by the FTT on or after that date.

The practice direction says that all applications and substantive appeals are to be dealt with on papers or by email as far as possible and be decided by a judge (working remotely) sitting alone. Where a matter cannot be dealt with on papers, a hearing by telephone or video will be arranged. Where that would not be suitable the case will be listed for a physical hearing when it is safe to do so. Although, the practice direction says that, as far as possible, proceedings are not to be adjourned or postponed without directions to deal with any matters that can be resolved remotely.