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NEW TAX INVESTIGATION POWERS
From Midnight on 31st March 2009, HMRC
were able to use new and sweeping Information, Inspection and
Enforcement powers when dealing with:
• CT and IT self assessment enquiries
• Employer compliance reviews
• VAT Assurance visits
• Construction Industry Scheme checks
There are no transitional arrangements for these powers, thus existing
enquiries into returns are now subject to these new rules.
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In brief, Officers are now able to demand all primary records without
the need to issue a formal notice (previously under s.19A TMA 1970).
They will still need to issue an information notice for supplementary
information such as appointment diaries, notes of board meetings,
commercial employment contracts etc. however these must be reasonably
required to establish the correct tax position of the client and may be
appealed to the new First Tier Tribunal unless a tribunal has already
granted the original information notice.
In addition, HMRC can issue notices to third parties where they wish to
check the accuracy of information provided by the taxpayer. Officers
will normally ask taxpayers to fill out an authorisation mandate,
however, if this is refused, they can approach the First Tier Tribunal
to obtain a formal notice.
Of more relevance is the ability of an officer to visit and inspect
premises. They would normally provide a minimum 7 days notice of such
visits to the taxpayer however, where there is a perceived potential for
the taxpayer to move stock/assets/trade away from the premises after
being advised of a visit, officers can make inspections unannounced.
There is no obligation for HMRC to notify the agent of such inspections,
thus, a client could be contacted and inspected without the agent being
aware of it until his client places a tax demand on his desk and asks
him to deal with it.
Now, more than ever, clients should be warned to contact their
agent as soon as HMRC makes initial contact, especially in those rare
cases where they turn up unannounced.
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