Individuals Stakeholder Forum

HMRC Compliance Checks Brief

Who is likely to be affected?

  1. Individuals and businesses who are within the scope of PAYE, VAT, income tax (IT), capital gains tax (CGT) and corporation tax (CT) and who pay tax or make claims.

General description of the measure

  1. Legislation was introduced in Finance Bill 2008 to reform the rules for checking that businesses and individuals have paid the correct amount of IT, CGT, CT, VAT and PAYE or claimed the correct reliefs and allowances.
  2. There are three elements:
    • aligned and modernised record keeping requirements;
    • new inspection and information powers; and
    • aligned and modernised time limits for making tax assessments and claims.

Operative date

  1. Information powers and penalties for failure to comply with these obligations will have effect on and after 1 April 2009. Time limits for making assessments and claims will need a transitional period and so will become fully operative on and after 1 April 2010.
  2. The new powers will align and modernise HMRC`s access to records and information.
  3. The new package will align existing powers and safeguards and introduce:
    • a power to inspect records required under the record-keeping legislation - this restricts the existing VAT and PAYE inspections to statutory records and introduces a new power of inspection for direct tax
    • a power to require supplementary information which is relevant to establishing the correct tax position
    • a power to require third parties to provide information which is relevant to establishing a taxpayer's correct tax position
    • a power to visit business premises and to inspect records, assets and premises
    • removal of VAT and PAYE powers to undertake inspections at private homes without taxpayer consent
    • appeal rights against any penalty and against information notices which have not been pre-authorised by an appeal tribunal
    • penalties for failure to allow an inspection and failing to comply with an information notice, including a tax-geared penalty which can be imposed by the new upper tier tribunals
    • an updated criminal offence of destroying or concealing records requested under a notice authorised by a tribunal

Aims of workshop

We need to advise your customers of the changes and new powers especially what we can and cannot do. What we would like from our discussion on the 2 October 2008 is:

  • How do your customers find out about tax changes in general?
  • What is the most straightforward and effective way of informing them?
  • Do they prefer us to cite specific scenarios in our communications?
  • Would they use a direct feedback service say by telephone?