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.