| 4.1 | Under self assessment the
critical examination of tax returns forms an integral part of the
‘process now-check later’ regime and represents a
powerful deterrent to those who do not wish to comply with their
tax obligations. |
| 4.2 | During the routine
processing HMRC check the tax return to correct any obvious errors
or omissions that come to light at that stage. Some telephone calls
may be made to resolve any minor queries in order to ensure that
the return is accurately processed at the first attempt. For many
customers the tax return, including the self-assessment, is simply
processed as submitted. |
| 4.3 | Once initial processing
is completed HMRC check tax returns and have an explicit right to
enquire into the completeness and accuracy of the information
provided in any tax return. This right covers all enquiries, from
straightforward requests for further information on individual
items through to full reviews of books and records. It is supported
by an information power. |
| 4.4 | It is not necessary to
justify an enquiry by identifying particular aspects of tax the
return that give cause for concern. So, in theory, all enquiry
cases could be chosen on the basis of a random selection process.
Random selection plays an important part in the regime, but the
majority of enquiry cases are specially selected by reference to
the information in the tax return, and other information in HMRC's
possession. |
| 4.5 | There are clear rules
covering the time limits in which enquiries can be made, the nature
of the information that can be sought and the conduct of the
enquiry itself. At the end of any enquiry the taxpayer has full
rights of appeal if they do not agree with HMRC’s findings.
The taxpayer also has the right, at any time once an enquiry is
started, to ask the tribunal to direct that a notice be issued
completing the enquiry. |
| 4.6 | The time limit for
enquiries only applies to the opening of an enquiry. It does not
place any direct constraints on the time taken to complete the
enquiry, because this varies according to the nature and complexity
of each case. Once the time limit for enquiry has passed, HMRC will
not be able to open an enquiry and subsequently amend a taxpayer's
self assessment and will only be able to make a further (discovery)
assessment if the taxpayer has been fraudulent or negligent or has
made an incomplete disclosure of information. |
