HMRC have initiated an investigation targeted at thousands of TV freelancers working through media accountancy firm Christopher Lunn & Company.  The department has written to the clients of Christopher Lunn & Company of Crowborough, East Sussex, stating that, from information obtained so far, ‘tax returns submitted to HMRC may not be correct for a number of reasons’.

According to an article on www.taxation.co.uk John Cassidy, a tax investigations partner at the London office of accountants PKF, did not think the criminal investigation was likely to have been triggered by over-claims such as the ones detailed above, which would normally have been dealt with by investigations into clients’ returns. He believed it was more likely to have resulted from HMRC’s belief that clients were ‘routinely, and apparently falsely, claiming self-employment status by directors’, which was part of the second set of areas listed in the taxman’s letter. This included allegations of retrospective creation or apportionment of income and expenses into a limited company.

Clients have been given until 30 November to make a full disclosure, after which irregularities discovered ‘will be dealt with either by criminal or civil procedures… depending on the nature of those irregularities.’

Clients are not insured with a third party insurer against investigations. Instead, the firm operates an enquiry fund into which clients pay an optional premium to be covered against the cost of investigations. The fund will not be used to cover the investigation into Christopher Lunn & Co. (which is being legally represented by McGrigors solicitors), but it could be called on to cover the cost of enquiries into clients which result from the main investigation.

For full details see: http://www.taxation.co.uk/taxation/articles/2010/10/08/21099/tv-specialist-facing-criminal-inquiry

Any members who have been impacted by this investigation should seek guidance via our specialist freelance tax helpline.