HMRC Investigations

HMRC Compliance Checks

The way HM Revenue & Customs carries out enquiries will change from 1 April 2009. The new Compliance Checks will cover the following areas:

• Income Tax
• Capital Gains Tax
• VAT
• PAYE
• the Construction Industry Scheme
• Corporation Tax

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 ask 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

The new compliance checks legislation is designed to make the tax system simpler and more consistent.

HMRC have published a number of factsheets covering the new Compliance Checks regime.