This helpsheet provides further guidance on the application of the Fundamental Principles and Standards covering interactions with HMRC which are not in the context of a client’s tax affairs.
A member must respect any request by HMRC for confidentiality until such time as HMRC lifts this requirement or the matter comes into the public arena. If in doubt the member should clarify whether confidentiality is required and the scope and duration of the requirement for confidentiality with their HMRC contact on the matter.
HMRC has confirmed that representatives of a professional body (the body) may share confidential information with senior people from the body, in order to keep the body informed.
If HMRC approaches a member for a general meeting the member is recommended to find out the nature and purpose of the meeting before engaging in further discussion or agreeing to meet:
- If the meeting relates to one or more specific clients the member should refer to the guidance on Dealing with irregularities.
- If the purpose of the meeting is a general discussion about the firm’s portfolio and approach at a generic level the member should refer to guidance in the paragraphs below.
- Any approach to a member by HMRC in relation to the legality or professional competence of their work should be regarded as a serious matter and the advice below should be followed (see section: Targeted interactions).
HMRC has given assurances that the reason and purpose for any meeting will be made clear at the outset.
Whatever the nature of HMRC’s enquiries a member must not disclose confidential client information without the prior consent of the client, unless there is a legal duty to do so. HMRC has extensive statutory powers to obtain information.
If it appears that the proposed meeting will be a general discussion, the member may decide to meet HMRC, but is under no professional obligation to do so. The member should ensure that any information provided to HMRC is accurate. They should caveat any general explanations to make it clear if there are or may be exceptions. If in doubt the member should check the facts before responding. If the member has doubts about the relevance of any questions asked by HMRC then clarification should be sought. If at any stage the meeting appears to be evolving into a challenge to the legality of activities at the member’s firm or the professional competence of the firm, the member should end the meeting and then refer to the guidance below (see section: Targeted interactions).
Any approach to a member by HMRC in relation to the legality or professional competence of the member or their firm’s work should be regarded as a serious matter. HMRC has specialist units, part of whose brief is to monitor and investigate the standards of tax advisers and consider civil or criminal proceedings against individuals or, less commonly, firms.
Where the situation in the paragraph above applies, a member should consider taking specialist and/or legal advice at an early stage. The member should also consider asking the specialist to conduct the discussions with HMRC, since a member may not always be the best advocate in their own cause.
A member should consider whether they have an obligation to notify their professional indemnity insurer about any HMRC investigation and also whether any costs incurred by them in the course of the investigation may be covered by any investigation costs insurance held by them.
A member should also consider whether they have an obligation to notify their professional body at any stage.
Government makes policy. However, many members will be involved in providing input through the consultation process. Consultations can take many forms including formal public consultation processes, research process, HMRC open days for interested parties, consultation discussions with HMRC and participation in HMRC working groups. A member’s objective is to apply their technical expertise and practical and commercial experience to provide input to assist government in making informed choices about policy options and in achieving their policy objectives in an effective manner without unintended consequences.
A member who actively participates in such consultations should:
- Be open and transparent.
- Make clear the basis upon which they are providing input, e.g. whether it is on behalf of their representative body or firm or, for example, on behalf of a group of clients in a particular industry.
- Draw to the attention of HMRC any unintended consequences they have identified in the legislation at the time that they are making representations on that legislation.
- Not disclose client / taxpayer-specific information as part of their involvement in the consultation process without, first, gaining express clearance.
- Not disclose matters relating to their employer / sponsoring organisation outside of their terms of reference without, first, gaining express clearance.
A member may be seconded or be responsible for arranging a secondment to HMRC. References to HMRC in this Chapter include any other body, department or organisation to which a member may be seconded. The terms and conditions of any secondment should be agreed in writing.
The secondee should be mindful that, for the duration of the secondment, their role and obligation is to serve the interests of HMRC. Care should be taken to minimise any actual or perceived conflict of interest between HMRC and the seconding organisation. Confidentiality must be maintained in both directions: the member must keep client affairs private from HMRC and must similarly not use knowledge gained at HMRC to help clients or colleagues.
A secondee should act openly and transparently in providing input based upon their experience outside HMRC. During their secondment, the secondee has a professional duty to draw attention to any unintended consequences they identify, when reviewing draft legislation.
Upon completion of the secondment the secondee and their employer should be alert to the risk of being seen to have taken undue advantage of information gained whilst working for HMRC. Factual statements about the individual having undertaken a secondment, particularly in a CV, would be unexceptional, but active promotion of knowledge and experience gained may be inappropriate. This would particularly be the case if the member advertised their knowledge in a way that implied they can now solve problems based on ‘inside knowledge’. To minimise the risks of misunderstanding, the secondee should agree with their HMRC supervisor what can and cannot be said or discussed at the conclusion of the secondment. In any case they should avoid involvement in the affairs of any taxpayer they were aware of or dealt with at HMRC for a significant period.