After five years of scrutiny from HMRC, Buzzacott managed to prove gifts to a client. were non-taxable. Barbara Bento and Mia Robinson relate a sorry tale.
In September 2021, Buzzacott’s Tax Investigations team was approached by an accountant seeking help with an unusual compliance check. Their client, ‘Ms K’, a non-native UK resident, had been under scrutiny by HMRC for over a year. The issue? Thousands of pounds of cash deposits into Ms K’s bank accounts – unsolicited gifts from wealthy overseas friends – were being challenged by HMRC as taxable income.
Despite Ms K’s cooperation and repeated explanations, HMRC insisted on treating all cash deposits since 2014 as taxable, initially estimating a total tax liability of over £240,000. Ms K had already provided bank statements and answered extensive questions, yet HMRC demanded more: personal/private and financial details in relation to the non-resident gift-givers. Given the nature of Ms K’s relationships with these generous families, their cultural values, religious beliefs and history of supporting her during times of need, approaching them for formal statements would have caused significant embarrassment and risked damaging deeply personal connections. In light of this, we declined HMRC’s request.
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