CCM12720 - Opening and Working Enquiries: Taxpayer is a Tax Credits Claimant and the SA Enquiry uncovered Tax Credit Risks other than Income

SA Enquiry shows that there is nothing demonstrably wrong with the returns or accounts but the enquiry subsequently uncovers Tax Credit Risks

The Enquiry officer must tell the taxpayer that there may be Tax Credit consequences and consult with the Tax Credit Consultant and CCRO to discuss the materiality of the findings and risk assess the new risk

If after consideration the Tax Credit Consultant and CCRO think that the risks are not material, they should clearance to the SA Enquiry officer to close down the SA enquiry. The TCC should give the Enquiry officer a clearance stencil to provide an audit trail in the SA Enquiry folder.

If the Tax Credit risks are material the CCT team leader should :

• Allocate the case to the Tax Credit Consultant or other CCO
• Ensure the SA links are maintained if another CCO is allocated the case
• As soon as the S19 (1) TCA 2002 enquiry is open give the SA Enquiry officer clearance to close the SA case.

SA enquiry still ongoing but there are TC risks

The Enquiry officer must tell the taxpayer that there may be Tax Credit consequences and consult with the Tax Credit Consultant and CCRO to discuss the materiality of the findings and risk assess the new risk

If after consideration the Tax Credit Consultant and CCRO think that the risks are not material, they may give clearance to the SA Enquiry officer to continue with the SA enquiry without further reference to the Tax Credit side, unless some further information is uncovered which requires the original decision to be reconsidered. The TCC should give the Enquiry officer a clearance stencil to provide an audit trail in the SA Enquiry folder.

If the Tax Credit risks are material the TCC should:

• Issue the TC opening letter and Factsheet but tie this is with the SA enquiry
• Jointly work the case as shown below

SA enquiry establishes or quantifies omissions or adjustments and Tax Credit Risks other than income uncovered during the enquiry and TCC considers these to be material.

CCT Team Leader action:

• Allocate the case to the Tax Credit Consultant or other CCO
• Ensure the SA links are maintained if another CCO is allocated the case.

TCC action:

• Maintain Diary / Risk Plan/ TCW/QMS etc
• Ensure the case is clearly marked 'Subject to SA Enquiry' and the SA link box is ticked on the Tax Credit Workbench
• Issue the opening letter (notice of enquiry) and the Factsheet to the claimant in line with existing instructions in the Claimant Compliance Manual. If appropriate issue it with any relevant correspondence stemming from the SA enquiry, for example the Enquiry officer’s letter advising the taxpayer of the income omissions. If an Agent Acting check that an appropriate mandate is in place
• Judge what information is required for the purpose of the Tax Credit enquiry
• If the information is not already in the Department’s possession request only information that you could include in a formal notice under the Tax Credit information powers at S19 (2) TCA
• Do not use either the Tax Credit informal request for information, or any subsequent formal use of information powers, to obtain information for the SA enquiry under any circumstances
• Liaise with the Enquiry officer to ensure the enquiry addresses both the Income and the Tax Credit risks under 'Whole Case' working
• When you obtain information for the purposes of the Tax Credit enquiry you can pass it to the SA Enquiry officer. But you must not ask for the information in the knowledge that the real reason is for purposes other than Tax Credits, e.g. for the SA enquiry
• Whilst the SA enquiry will lead, you will advise at all stages on Tax Credit issues
• Attend any meetings with the taxpayer / claimant, and lead on requests for information / explanations and test those explanations in respect of Tax Credits
• In the interest of whole case working and to make the process as seamless as possible for the taxpayer/claimant, make every attempt to settle the Tax Credit and SA position at the same time
• Consider whether the current year’s award needs revision for income.