The legislation governing HMRC compliance checks
The way HM Revenue & Customs carries out HMRC compliance checks (also known as enquiries, visits and inspections) will change from 1 April 2009. These changes will affect how tax investigations are managed for:
- Income Tax
- Capital Gains Tax
- PAYE (Pay As You Earn)
- the Construction Industry Scheme
- Corporation Tax
From 1 April 2009, HMRC will have one set of powers allowing them to:
- visit businesses to inspect premises, assets and records
- ask taxpayers and connected third parties for more information and documents
HMRC compliance checks are powered by the legislation at Schedule 36 of the Finance Act 2008.
This HMRC compliance checks legislation covers:
- 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
What does this approach to HMRC compliance checks mean?
Do not be fooled into thinking this is good news. The language may have changed; HMRC’s intent certainly has not.
Let us look at the language of HMRC compliance checks:
- HMRC will say they want to “check your tax position”.
- That every year they carry out standard tax returns checks.
- That this does not necessarily mean that they have doubts about the integrity of the tax return and/or accounts that have been submitted.
It all feels very innocent, very friendly and very random. Far from it. A tiny percentage of tax returns are selected randomly by the HMRC super computer annually.
If you are selected for a compliance check, HMRC very likely feel that there is a risk that tax has been underpaid. They are looking to secure a yield and that means your money.
HMRC compliance checks Specialists