This, unfortunately, applies only for the first accounting period following the commencement of winding up. However, where the amounts of interest relief being claimed are significant, it can give a significant reduction in tax payable. The basis of the self assessment regime is that there is an obligation on the individual to ascertain and pay his tax liability, with the opportunity for the Revenue to check this after the event. This requires careful judgements to be made by taxpayers, often after discussions with professional advisers, on technical issues such as the chargeability of income or the eligibility to reliefs. The perception is that if that judgement can be shown to be reasonable, any shortfall in tax due if the decision is overturned will not be attributable to negligence.
Caution needs to be exercised in such situations.
Under s99 TMA 1970, anyone who knowingly provides, or assists in the provision of, incorrect information to the Revenue is liable to a penalty not exceeding 3000. Turning a blind eye and letting the taxpayer take the risk is not enough to protect the adviser. In addition, there is the real risk that the affairs of the professional adviser will themselves come under scrutiny, along with those of all of their clients, as allowed by the legislation at s20A TMA 1970. This is an area that the Revenue is becoming increasingly concerned about, to the extent that it is now understood that any professional advisers whose affairs are taken up under s99 will automatically be considered for prosecution by Special Compliance Office.