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Sam
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Category: UK Tax
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Hi, I was self-employed and on low income and and stopped

Resolved Question:

Hi,

I was self-employed and on low income and and stopped trading in June, but now I have received a letter from HMRC for Tax Credits Examination. They have asked me to provide business related information as well as personal info like my child's school, passport, NHS Medical Card of my child, my tenancy agreement, documents that proves my child's place of residence, letters relating to my child's healthcare. This is so confusing for me as I read that the law does not permit HMRC to ask for personal records ie relating to the taxpayer’s physical or mental health.

I have two questions:
1) Is HMRC allowed to ask me personal information like above regarding my child?

2) HMRC asked for my bank statements. As a sole-trader I was not obliged to have a separate business account. However I read on the www.Litrg.org.uk website that HMRC may ask to see a private account but they do not have a statutory right to do so. I want to provide as much as info as possible and even willing to provide my personal bank statement but I don't think it's HMRC's right to know if I shopped at Tesco's or had a coffee at Starbucks. All I want to show HMRC is the in and outgoings on my statement which are only business related and not personal related. I was wondering If I have the right to blank out personal spendings on my personal bank statement? Your advice will be really appreciated.
Submitted: 1 year ago.
Category: UK Tax
Expert:  Sam replied 1 year ago.

Hi

 

Thanks for your question

 

I am sorry to hear that you are being pursued for a tax credit review.

In answer to your questions

 

1) Yes they have every right to ask for evidence to back up the child, if a claim for the child element of tax credits was claimed

2) You are mixing up your legislations, HMRC (Taxes) only have the right to ask for personal bank details IF they feel there is a need to do so, however as a sole trader if you used your personal bank account (which is fine, as its only limited companies that have to use a business bank account by law) then both HMRC (Taxes) and HMRC (Tax credits) have the right to ask for evidence of the income that relates to your self employed earnings, as you choose to use one bank account for all purposes. So whilst you may feel you wish to blank out the personal spending, HMRC need to see this was personal (as opposed to business) spending, so I would not blank this out, I would merely highlight it as being personal not business, or highlight the business (as this would be easier. But I am afraid, the moment you chose to use a personal bank account for all, you put yourself in the position to make all available to HMRC.

So therefore the fact this was a also used for business overrides the fact it was primarily a personal account. And it would be advisable to comply.

 

I am sure your bank account verifies the business income, and any evidence you can submit for your child, will soon get this matter cleared up for you.

 

Feel free to ask any follow up questions, on the answer I have supplied, but if you could take the trouble to rate the level of service I have provided, it would be very much appreciated, as this ensures I am paid.

 

Thanks


Sam

 

 

 

 

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12900
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
Sam and 4 other UK Tax Specialists are ready to help you
Customer: replied 1 year ago.

I actually noticed that you worked for HMRC hence I felt I had to call a Tax help office to verify your answer to my question and I was advised tthat I could blank out out my personal expenditure as HMRC has no statutory rights to see my personal bankaccount. So here you go!

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