Key Information - Changes to how HM Revenue & Customs carries out compliance checks from 1 April 2009

The way HM Revenue & Customs (HMRC) carries out compliance checks (also known as enquiries, visits and inspections) will change from 1 April 2009. These changes will affect how HMRC manage compliance checks for:

• Income Tax
• Capital Gains Tax
• VAT
• PAYE (Pay As You Earn)
• the Construction Industry Scheme
• Corporation Tax

From 1 April 2009, HMRC will have one set of powers covering PAYE, VAT, Income Tax, Capital Gains Tax, Corporation Tax and Construction Industry Scheme to:

• visit businesses to inspect premises, assets and records
• ask taxpayers and connected third parties for more information and documents

These powers are provided by Schedule 36 of the Finance Act 2008.

The new legislation will also provide:

• Revisions to record-keeping requirements after 1 April 2009
• new time limits for assessment and claims which will not be fully in force until April 2010 - but there will be some transitional arrangements from 1 April 2009

The time limit changes mean that the deadlines Self Assessment and PAYE taxpayers have to make tax claims are changing. See table below

These measures are provided by Schedule 37 and Schedule 39 of the Finance Act 2008.

Summary of changes at a glance

The new legislation provides HMRC with:

• one set of powers to inspect business records, assets and premises
• the ability to see statutory business records without a right of appeal
• the ability to look at records for PAYE, Income Tax, the Construction Industry Scheme, Capital Gains Tax and Corporation Tax during the tax year before a return has been submitted
• a new power to correct obvious errors in a tax return based on information held by HMRC
• a single approach across all taxes to asking taxpayers and third parties for supplementary information, based on formal information notices with a right of appeal

The legislation also makes some changes to the way HMRC must carry out compliance checks, including

• a new four year time limit for assessments and claims - a reduction from six years for Income Tax, Capital Gains Tax and Corporation Tax and an increase from three years for VAT
• reductions in extended assessment time limits
• a streamlined process for closing Corporation Tax assessments
• a new statutory ban on inspecting purely private dwellings without consent
• a statutory requirement for HMRC to give at least seven days prior notice of a visit, unless either an unannounced visit is necessary, or a shorter period is agreed
• a new requirement that unannounced visits must be approved beforehand by a specially trained HMRC officer
• a statutory requirement on HMRC to act reasonably

For more detailed information on HMRCs new powers from April 2009, including a summary of the supporting legislation at Para 1 Sch 36 FA 1998, please click here or refer to the Sch 36 FA 1998 link.

If you have any questions or concerns regarding HMRC's new compliance powers then please contact Admiral Tax Investigations immediately.

A specialist tax investigation consultant is on hand to take your call 24 hours, 7 days.

Admiral Tax Investigations guarantee all fees up front, so you our client can plan appropriately and worst of all avoid any unexpected billing surprises.

For a no commitment, confidential discussion about how we can resolve your tax investigation and save you money, contact Admiral Tax Investigations day or night:

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