Meeting Notes Really Do Matter

Mark McLaughlin points out that taxpayers and agents should pay close attention to the contents of any notes of meetings with HMRC in tax return enquiries

IN A TAX RETURN ENQUIRY, HMRC will often request a meeting with the taxpayer, in order (for example) to obtain more information about a self-employed individual’s business.

When such meetings take place, an HMRC officer will usually take notes. There will often be two or more HMRC officers present, one of whom will be tasked with note taking. What should taxpayers and agents do about notes of meetings with HMRC during tax return enquiries?

HMRC’s view

HMRC officers are instructed (in HMRC’s Enquiry manual, at EM1821) to always take notes of meetings. HMRC considers that the notes will allow both parties to agree the facts recorded, or to identify any areas of disagreement. Meeting notes are also considered by HMRC to be important evidence in the event of a tribunal hearing, or if it is considered necessary to commence a criminal investigation.

A copy of HMRC’s notes will normally be sent to the taxpayer after the meeting. The HMRC officer will probably ask for the notes to be agreed, or at least commented upon. The HMRC officer may also ask for the notes to be signed. HMRC states (at EM1834): “The value of a signed record is obvious in preventing later disputes about what was said. If the taxpayer refuses to sign and does not provide a credible reason for the refusal, this may cast doubt on the accuracy of what was said. On occasions, a taxpayer who was dishonest may not be prepared to sign a formal statement recording what they said.”

However, in my view the HMRC officer’s meeting notes should not normally be signed. In fact, some professional firms have a policy of advising their clients not to sign the notes. HMRC should be informed of any such policy, so that a refusal to sign is not taken to infer any dishonesty by the taxpayer, or any lack of cooperation.

Complete and correct?

What about reviewing HMRC’s meeting notes? The taxpayer and agent are under no compulsion to do so. However, a careful review (and correction, if necessary) of HMRC’s notes may prevent problems for the taxpayer later in the enquiry, or upon its closure.

For example, in Duffy v Revenue and Customs Comrs [2007] STC (SCD) 377, HMRC opened an enquiry into the taxpayer’s 2002/03 tax return. A meeting took place between an HMRC officer and the taxpayer in March 2005. The HMRC officer’s meeting notes referred to the taxpayer’s responses to questions raised, including ‘Mr Duffy said he had no investments or interests in property in Spain’ and also ‘Mr Duffy confirmed that he had held no other accounts and would be prepared to sign a statement to that effect’. However, the taxpayer did own a property in Spain, and also had a bank account there, although he did not possess either at the date of the meeting. HMRC subsequently amended the taxpayer’s tax return for 2002/03 and made discovery assessments for other tax years. The taxpayer appealed. The issues in the appeal included whether there was negligent conduct on the taxpayer’s part.

The Special Commissioners held (among other things) that the taxpayer’s answers to the HMRC officer’s questions amounted to negligent conduct, and commented: ‘In relation to his answers relating to the Spanish property and bank account the appellant said in evidence that he thought the inspector was asking questions about Spanish property or non-UK bank accounts as at the date of the interview, which he answered correctly that there were none. We do not accept he thought this.’ The Commissioners added: ‘If the appellant had really thought that the question related to the present he would surely have amended the statement to refer to the present rather than the past.’

It is important that HMRC’s notes are complete and correct. A thorough review of HMRC’s notes gives the taxpayer an opportunity to identify and correct any ‘off the cuff’ answers given in good faith at the meeting, but which were inaccurate or misleading. In addition to reducing the risk of penalties for errors, the notes may potentially restrict the opportunity for HMRC to make discovery assessments (for example, see While v Revenue and Customs Comrs [2012] UKFTT 58 (TC)).

Do it yourself

It will generally be good practice for agents to take their own detailed meeting notes. Ideally, the agent should ask a colleague or secretary to attend the meeting and concentrate on writing detailed notes.

The agent’s notes could later be used for comparison purposes to highlight any errors or omissions in HMRC’s notes, or retained as a contemporaneous record of the meeting if HMRC does not provide notes for any reason.

Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP is a tax consultant to professional firms (tax@ markmclaughlin.co.uk and mark. mclaughlin@tacs.co.uk), Managing Editor of TaxationWeb (www. taxationweb.co.uk) and Editor of McLaughlin’s Tax Case Review (www.taxinsider.co.uk/mclaughlins-tax-cases.html)