Tax 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.

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