Key Information - HMRC Compliance checks. Requests for information and documents

We have encountered occasions recently where HMRC begin a compliance check and then proceed to ask for information and documents that may not be "reasonably required"

It should be remembered that a compliance check will normally begin when HMRC feel that there is a tax risk. In other words that tax may have been lost as a result of an inaccurate return being filed.

Reasonably required

The first question you should ask yourself is. What are HMRC checking?

Strictly, a compliance check should be confined to the area of risk. That could be a specific aspect of a tax return or an entire entity - for example your business.

What are HMRC asking for? Is this reasonably required to check your tax position?

HMRC will sometimes ask for sight of information that is not reasonably required. For example private bank statements, where they have yet to demonstrate that there are concerns about the integrity of a business tax return and/or supporting financial accounts submitted

Breaking the records

This is referred to internally as "breaking the records"

In other words HMRC will have highlighted a risk based upon a tax inspector's review of the businessrecords.

Of course in such circumstances, it may be perfectly reasonable for HMRC to request sight of personal records. After all they have demonstrated a clear risk.

However, in my view it would rarely be appropriate to ask for this information in an opening letter.

Caution

Compliance checks come in many guises and there is no hard and fast rule.

My advice is simple. Be cautious and seek the advice of an experienced tax investigation specialist before embarking on any compliance contact with the taxman.

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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