BIM00520 - Introduction: giving advice to customers
Our role
Our duty is to explain how we consider tax law should be
applied. This does
not include giving advice to customers on how to
arrange their personal affairs. The distinction is important.
In practice, a customer might, on making an apparently simple
enquiry, omit some important relevant fact. This may not be
deliberate, but arises because the customer is not aware that it is
relevant to the claim for relief, or liability to tax. In addition,
there may be interactions with other taxes, or financial, non-tax,
implications.
You should always find out as much as possible before giving
customers advice. Anyone attempting to give advice without
knowledge of
all the facts is at risk of giving misleading
information. Every year a small number of claims where this has
occurred are received by the Parliamentary Commissioner for
Administration (the Ombudsman) and the Adjudicator.
Advice in relation to past events
We are here to help customers understand their rights and
obligations. This includes drawing attention to any deductions or
reliefs, which seem to be clearly due but which may have been
overlooked, and responding freely to requests for guidance on
customers’ rights and liabilities and on making returns,
claims to relief, etc.
If customers have specific enquiries about their own affairs,
it may be necessary to respond to these in detail, by letter,
rather than in general terms.
Advice in relation to future events
You can provide tax advice on events which are yet to happen,
but you must be careful in doing so. It would be wholly
inappropriate to advise on the tax implications of a transaction
about to be carried out, other than in general terms.
Your response should be, for example, that under the present
law an allowance is due where certain conditions are met. Always
accompany your answer with a clear statement that ‘whether
the allowance would be given in the case in question will depend
entirely on the law at the relevant time and on the precise
facts’.
You should go no further than that in attempting to deal with
a taxpayer's own affairs until they come to be examined in the
normal way. Going too far too early can lead to decisions being
judically reviewed later.
Complex transactions
The more complex the transaction, the greater the need for the
taxpayer to obtain professional advice from an advisor who can
examine the particular circumstances closely and ensure that all
the relevant considerations have been taken into account.
Advice should not be given where it appears that the enquirer
is seeking assistance in finding a way around the straightforward
interpretation or application of the statute in line with normal
HMRC practice, or where the transaction contemplated is clearly
designed to avoid or reduce the tax charge which might otherwise be
expected to arise.
Limited exceptions to the above rule are set out in Code of
Practice 10 in which we give advice about the HMRC interpretation
of the law (including its application to a proposed transaction).
These are:
- the interpretation of legislation passed in the last four Finance Acts,
- the application of double taxation agreements,
- whether someone is employed or self employed,
- Statements of Practice and extra statutory concessions,
- other areas concerning matters of major public interest in an industry or in the financial sector (always get advice from the relevant technical specialist).
