HMRC visits – compliance checks
With effect from 1 April 2009 there will be significant changes to the way that HMRC handles compliance checks (also known as enquiries, visits and inspections). These changes arise from the new powers contained in Schedule 36 of the FinanceAct 2008. The changes will affect, in particular HMRC compliance checks for the following taxes
– Corporation Tax
– Income Tax
– Capital Gains Tax
– Construction Industry Scheme
The changes follow the merger between HM Customs & Excise and Inland Revenue in 2005. In future there will be a more standardised approach to HMRC inspections and all of the taxes mentioned above will be covered by the same set of HMRC powers. These powers will allow HMRC to inspect business records, premises and assets as well as to view statutory business records without the right of appeal.
HMRC will also have the power to ask third parties and taxpayers for additional information and documents and will have new powers to correct obvious errors in a tax return and to look back at the tax year before a return was submitted.
The legislation also makes a number of important changes to the way HMRC must carry out compliance checks including:
– The introduction of a new four-year time limit for assessments and claims – this is a reduction from six years for Income Tax, Capital Gains Tax and Corporation Tax and an increase from three years for VAT
– A reduction in extended assessment time limits
– Streamlining the 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 notice of a visit unless an unannounced visit is necessary or a shorter notice period is agreed
– From 1 April 2009 unannounced visits must be approved in advance by a specially trained HMRC officer
– There is a statutory requirement on HMRC to act reasonably