Ben Chaplin, Managing Director of Peninsula TaxWise, takes a look at the new powers of HMRC and what it means for your business. Peninsula TaxWise provides an insurance to protect you from costly HM Revenue & Customs tax investigations and also provides a range of services to advise and support businesses. For more information please contact Peninsula TaxWise on 01455 852555.
HMRC have recently reported that they want to achieve greater consistency across the taxes (income, corporation, PAYE, CIS, capital gains and VAT), in terms of the penalties handed out and how taxpayers are monitored. The move has been seen by tax professionals as inevitability ever since the merge of the Inland Revenue and HM Customs, with the powers of the old Inland Revenue being enacted to match those of Customs and Excise.
HMRC now has improved access rights, which means it is able to inspect a business premises and a taxpayer’s record keeping. They can give a minimum of 7 days’ notice to the taxpayer or they can just turn up unexpected, demanding to inspect books and records but to do this they do require the prior permission of a senior HMRC officer. Refusing access to these so-called real time’ visits will arise in a penalty. HMRC doesn’t have the right to arrive and just go through filing cabinets; however because of the timescales involved it is difficult to have an adviser present to ensure they only see what they’re allowed to.
The purpose of real time’ visits is to check the general quality of accounting records kept in support of returns. If records do not comply with minimum standards, HMRC can issue an assessment to tax on the basis that underpayment is likely because of poor quality accounting records.
In almost every case you will receive at least 7 days’ notice of an inspection. However, if you have an unannounced visit from the tax man and you’re not able to contact your accountant, be polite and answer their requests. Ask to see authorisation from a senior officer and maintain control of the situation. Offer them a meeting room, and fetch any information they ask for rather than allowing them to snoop through the accounts files. It is considered that a business won’t face unannounced visits unless there’s cause for doubt, e.g. because details from third parties don’t tie in with what has been reported on the tax return.
If you do receive notice of a visit from HMRC or notice of an enquiry, we strongly recommend you take immediate professional advice, make sure you employ the help of someone who has enquiry experience and comes recommended. If your accountant doesn’t have the right level of expertise, they probably know of someone who does or you can of course contact Peninsula TaxWise on 01455 852 555.
If you are already a client and have taken advantage of Peninsula TaxWise fee protection insurance, then you will most likely find that the professional fees for dealing with HMRC is insured. Just contact the TaxWise claims team on 01455 852 560 who will be happy to help. If you do not have protection against the taxman then please call 01455 852 0550 and one of the TaxWise team will be happy to help.
Finally, remember, never ignore an enquiry notice from HMRC and always make sure you deal with any enquiry correspondence immediately to stop the situation getting worse. Keep in mind HMRC treat you as being guilty until you can prove you are innocent.