Jessica McLellan Tax Risk & Dispute Resolution Partner

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Jessica McLellan

Tax Risk & Dispute Resolution Partner

Jessica specialises in Tax Risk and Dispute Resolution, particularly for High Net Worth Individuals, Trusts and OMBs. Prior to joining Wilson Wright, she has worked as a Disputes Resolution specialist and within HMRC Central Policy. She is also a Chartered Accountant and qualified Centre for Effective Dispute Resolution (CEDR) mediator.

Jessica has broad experience across the tax disputes landscape, from proactive tax risk management to complex disclosures, settlement of legacy avoidance schemes and dealing with CoP9 Civil Investigation of Fraud. Her strong understanding of how HMRC works enables clients to obtain certainty and comfort in complex areas, escalation of complex disputes within HMRC and using Alternative Dispute Resolution (ADR) to resolve protracted cases.

Her approach offers an in-depth insight into how to navigate through HMRC’s decision-making process and governance to progress matters for clients. Jessica focuses on achieving clear practical solutions to tax disputes within the context of wider client family or commercial considerations.

13 Jun 2022

Across a number of areas, HMRC are awakening again after “snoozing” enquiries or delaying opening new ones throughout the pandemic.

In particular, HMRC seem keen on progressing cross-tax corporate enquiries given a large number of companies have not been looked at for a long period of time. Typically, HMRC would aim to check corporate tax returns every 5-10 years for mid-sized businesses as a matter of course.  Renewed funding internally within HMRC demonstrates that this is an established enquiry programme now and means these types of enquiries are going to become more common.  Whilst these enquiries are worked by Complex Evasion teams in HMRC’s Wealthy & Mid-Sized Business directorate, the majority of cases do not actually involve tax evasion. They instead take a holistic view of the business and focus on whether there are systemic errors in accounting and cash procedures.

Even for relatively low risk corporates, these enquiries are very time consuming and costly as they cover corporation tax, PAYE, VAT and any other specialist taxes the business may be involved with.  HMRC usually look to try and understand the economics of the business, then check whether the company’s records match this expectation. In addition, the enquiry may also involve detailed sampling of specific risk areas such as entertaining, benefits, credit notes etc.

The difficulty in dealing with these kinds of enquiries often comes from HMRC’s lack of commercial understanding and an inspector trying to apply high level industry standard percentages around profit and say cash:card sales ratios to daily accounting records that can fluctuate.

Similarly, HMRC’s initial information requests can be for hundreds, if not thousands of invoices and documents, particularly if they have been unable to visit a business’s premises.

It is vital at the start of such an enquiry to be clear about how the business operates, what accounting samples are expected to show and what level of initial sampling is proportionate to address risks without being onerous.

Agreeing to take one group company as the primary focus and a limited sample in terms of dates enables a balance between cost and HMRC’s procedures.  If problems are found, HMRC has the option to widen the sample but if not, then there is a better chance of getting an enquiry closed in a shorter timescale.

Therefore, whenever a company or group receives an enquiry letter, it is vital to sit down and work out how best to interact with HMRC in a way that is both collaborative and firm, which prevents the widening of HMRC’s scope to a point where the time and cost to the company is commercially damaging.