This might seem like an odd question to ask. After all, those working for HMRC are – mostly – human beings, and deserve to be treated with the kind of respect we accord to all our fellow men. But there’s more to the question than that, of course, and there are nuances in the way we interact with the tax collecting authority that can actually have quite a big impact on your tax and financial health. So here are a few thoughts, based on long (and sometimes bitter) experience of dealing with the Inland Revenue and HMRC.
Firstly, it’s important to bear in mind always the important principle that you shouldn’t mix business with pleasure. It may be very jolly, if you’re meeting HMRC or talking to them on the phone, to get on first name terms (which indeed are virtually universal these days) at an early stage and talk about the football teams you support. But you always need to be very conscious of the fact that, however friendly you are, they won’t be taking any prisoners themselves. You should never relax below the level of a completely professional approach to the discussion, even though lighter matters can be discussed “by the way”.
In meetings or on the phone, if HMRC ask you questions, answer them, but do resist the temptation to “chat”. Very often there’s a tendency for the taxpayer to ramble on beyond the scope of the questions actually being asked, and thereby give the HMRC participants in the meeting etc possibly valuable handles for further investigation and questions. It’s a case of getting a balance between seeming clam-like and uncooperative at one extreme, and inviting the taxman into your life on the other.
Secondly, don’t assume or act as though they know what they’re talking about. This may be the case, or very often, we find, it may not. We’ve often lamented the huge deterioration in standards of training at the tax authority over the last 30 years. In the 1980’s and 1990’s, HM Inspector of Taxes was a thoroughly trained technician, whose education, indeed, in the narrow area of tax was usually better than that of the average accountant (who had lots of other areas of expertise to get his head round). Such is lamentably rarely the case now. So don’t approach your interaction with the tax officer on the basis of a humble respect for every word they let drop. If you have your accountant with you, or indeed if you are the accountant, be prepared to stand up for the taxpayer’s point of view, without fear that you are facing some kind of heavy technical artillery: you probably won’t be. Remember also, in this context, that they are probably profoundly ignorant both of your business (and indeed business in general) and accounting rules. You may need to do a bit of fairly basic (but subtle) education in your discussions.
The way taxpayers and the Revenue interact should also be influenced by the fact that the tax officers themselves have no “skin in the game”. They should respect the fact that a discussion which is probably completely academic from their point of view, can mean a lot of money, one way or the other, to you as the taxpayer. Never let them overstep the mark in the respect in which they deal with you, therefore.
Finally, don’t hesitate, even for a split second, to complain, if you feel that HMRC’s so called “service” isn’t up to scratch. Many people are afraid that complaining will set the tax officer against them, and they’ll end up paying more tax. But do get rid of this idea altogether. If anything, the impact of somebody who complains - providing the complaint is professional and well based – will end up being treated with more respect by the taxman, and therefore, possibly, end up with a better financial result in the discussions. Above all, don’t let any misplaced sense of delicacy, or reluctance to hurt someone’s feelings, deter you from asserting your rights as vigorously as they should be. Remember, again, that the taxman has no skin in the game.