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The latest version of HMRC’s enquiry letter includes the following warning (tinyurl.com/nenqletter): ‘“Open source material” may also be used as part of this check. This is internet data which is available to anyone, such as news reports, internet sites, Companies House and Land Registry records, blogs and social networking sites (where no privacy settings have been applied.’
There is nothing new in HMRC using public information. In my day this amounted to little more than looking at the small ads in the local paper or driving past somebody’s house to see whether an extension had been built. I recall finding the sale particulars of a house owned by one person under investigation: the funding of the luxury furniture shown in the photographs was a fruitful line of enquiry. Facebook photos of luxury holidays or an Instagram post showing off a new car are just a modern continuation of what has always been available, although people undoubtedly make it easier for investigators by the astonishing amount of details they are prepared to share online.
But it is not just ill-gotten gains that are the danger area. Consider somebody arguing that their holiday accommodation is a business for inheritance tax purposes because they provide all sorts of ancillary services which are akin to those in a luxury hotel. All well and good until HMRC turns to the Facebook page and sees: ‘Get away from it all – spend a week in our luxury cottages where you can relax in the knowledge that you will be completely undisturbed.’
Does social media presence form a standing item on your client meeting agenda? Perhaps it should.
If you do one thing...
Read HMRC’s latest briefing on the loan charge which has some useful comments about loans which have been sold to third parties (tinyurl. com/hmrclslcfeb).
