Broadbrush Approach

A Doctor in the Midlands submitted his personal tax return and trading accounts to his local Inspector. After initial queries on the personal reliefs claimed had been satisfactorily answered by the accountant the Inspector decided to investigate the accounts on the grounds that he considered it unusual for a loss to be made.

Without detailed knowledge of the practice the Inspector immediately embarked on a series of letter raising a large number of queries concerning income received and expenses claimed.

At this stage the taxpayer suffered a heart attack and was obviously unable to attend to the Inspector's queries. The Inspector waited four months before insisting on meeting with the taxpayer and his accountant. This meeting was very lengthy and included a great deal of detailed questioning on the accounts and the Doctor's personal lifestyle. The questions even covered such extreme items as how the children spent their £2 per week pocket money.

Negotiations were proceeding with neither side giving significant ground with the accountant's correspondence alone amounting to over 40 pages. Even a second meeting between the taxpayer, his accountant and the Inspector failed to achieve any significant results.

The doctor once more became seriously ill and when the Inspector suggested a third meeting the accountant refused to allow his client to be involved. Progress was now being made but unfortunately the doctor died.

At this time the Inspector felt further protracted negotiation were no longer worthwhile and using a "broad brush approach" the case was settled without any further detailed explanations being sought.

At the end of the investigation there were additions, which reduced the losses in two years and created a very small profit in another year. No tax assessments were necessary.

The accountant's fees amounted to over £3,000.