9. Underestimating what HMRC knows
HMRC uses technology, including artificial intelligence and data mining to cross reference all government and international data held regarding an individual or business taxpayer.
Many people underestimate this data, and that assumption can lead to costly mistakes. It is always worth checking source documents such as portfolio summaries, chargeable life certificates, employment income and any foreign investments.
We also see other central and local government data being shared with HMRC to match against tax records as well as data from social media posted by the client themselves!
In its ongoing campaign on unreported property income, HMRC already uses land registry data and the new proposals under the renters reform bill will create a national register of landlords.
It is expected that HMRC will be able to use this public data for tax enforcement purposes.
10. Not sharing information between advisers
Mistakes can often occur even where a wealthy taxpayer has multiple advisers, simply because of the lack of co-ordination of information sharing, including information “falling between the two stools”.
It is always best to have mandates in place between advisers, so that all information is shared openly but securely, ideally in an automated system and on a real-time basis.
Picking up on the early warning signs of a potential tax issue for your client should be an important part of any adviser’s approach to client service — not to mention their own risk management.
Dawn Register is a tax dispute resolution partner at BDO
