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HMRC now has more reasons to investigate you

From 1 April 2009 HM Revenue & Customs (HMRC) has greater investigation powers. HMRC now has:

  • a combination of an inspection power (the right to access and inspect business premises, business assets and business documents)
  • an information power (the power to require the production of information and documents).

This will enable HMRC for the first time to:

  • access records before returns are filed (they can check records during an accounting year)
  • turn up unannounced to check the records
  • routinely have access to business premises and assets and have the right to copy or remove documents
  • the records and documents that HMRC will be able to access are very widely defined; and there is no right of appeal against an inspection

HMRC intends using these powers to inspect third parties’ premises and documents as a means of obtaining information about first parties.

HMRC may contact you to obtain details of transactions and correspondence you have with your suppliers and customers. It could also mean that the Revenue contact your customers and suppliers to find out details about you.

HMRC has published guidance on how they will implement the new legislation, which is as follows:

  • to confirm that appropriate records are being kept
  • to compare record systems with business activity, including premises and assets, to ensure those records fairly reflect the business
  • to check current actions which are relevant to a tax avoidance scheme – this raises the possibility of live HMRC checks while planning is implemented with HMRC seeking access to documentation (books and records, board minutes, emails etc).

Later blogs will cover how to reduce the risk of an enquiry, the new penalties and how to survive an investigation if you are unlucky enough to be selected for further review.

Please  contact me or your usual contact at Kirkpatrick & Hopes for further information.

This is a new page for my blog postings – for previous articles by me please click here.

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