An individual client of ours has been scheduled for a 9A TMA check of records (IT and VAT).
As usual, standard letter says they will be visiting her premises, and we have given the standard response of please come to us (we are only down the road).
However, they are looking into 2011-12 and in 2012-13 she ceased trading as a sole trader and incorporated.
Can they actually therefore ask to visit her premises? I realise this is pedantic and obviously I don't want to be difficult, but it's a genuine consideration. There's nothing to hide!
Also, as the VAT number was taken over as TOGC, and is now the company's responsibility, is it correct for them to be approaching the ex sole trader for a records check? I thought all of the responsibility now lay with the new owner of the VAT number.
Replies (5)
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Information and inspection powers
Business record checks aren't (themselves) carried out under s 9A TMA 1970. They come form the information and inspection powers in Schedule 36 FA 2008.
They can attend business premises and request information if they give the appropriate notice. They can give notice to the company (under para 10) to attend its premises for the purposes of inspecting the sole-trader's business records.
As you say, if they don't do it completely correctly, but they're essentially acting within their powers it just aggravates the situation to not allow them access. They may not have picked up on the incorporation, and may be happy to come to you.
If they get into wanting to make adjustments territory on the income tax side, then you need them to issue a 9A notice so that you can contain (or have closed) what must, by that stage, be an enquiry in reality.
If you have a 9A notice then you've already got the protection, but the powers they have available to them still put you in the same position at such an early stage.
For VAT, all they really have are the information and inspection powers, together with the ability to raise an assessment to the best of their knowledge and belief.
Yes
If there's any VAT to assess it will now be the company's responsibility.
I'd be inclined to make them be a bit clearer about what formalities they're using. They can't check anything to do with VAT under s 9A (although they can use their information and inspection powers) and an enquiry is better in my view, because if it becomes protracted you can always apply to the FTT for closure.
The clearer they are about what formalities they're using is also an indication that they do actually know what they're doing.