s29 enquiry - valid enquiry?

s29 enquiry - valid enquiry?

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Received an enquiry into 3 years (10/11, 11/12 and 12/13) Tax Returns for a client.

Letter from HMRC stated that there appears to be a difference in information they hold, and the amounts reported on Tax Returns.

So my initial fear was that HMRC had information of dividends on other shareholdings that we were unaware of.

However, after speaking to HMRC it just turns out that they cannot reconcile the amounts on the accounts (that we prepared) to those reported on the client's Tax Return, as the company year end doesn't line up with the tax year.

Preparing a schedule of dividends to help match the accounts to the Tax Return, is not really an issue, but it's rather the principle of the matter. Can HMRC open a discovery enquiry under s29 purely on the basis that they cannot reconcile the figures? They don't actually have details of under declared income - they just think that there might be, and want us to confirm.

Furthermore, they have opened an enquiry into the 2010/11 Return which is outside the normal 4 year limit, so must therefore be enquiring under the 6 year limit, implying careless behaviour.

My concern is that once I provide a schedule for the 3 tax years under enquiry, they may want to reconcile earlier years too.

Replies (14)

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By MBK
18th Jun 2015 12:47

No they can't ope an enquiry.

Ask them what's new information that they didn't have in the enquiry window. Unless the company's accounts have been filed late, or similar, then i can't see how there can be any new information.

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Stepurhan
By stepurhan
18th Jun 2015 14:37

Out of time. Out of luck

To clarify MDK's point, s29 discovery requires that they were not in a position to open an enquiry within the normal window. (due to not having some information in that time).

I concur that nothing you have said indicates this is the case, and hence the discovery is invalid. Unless they come up with something more, the only thing you are obliged to send them is a letter asking for the enquiry to be closed as not being valid discovery.

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By User deleted
18th Jun 2015 14:48

What is a s29 enquiry?

.

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By MBK
18th Jun 2015 14:49

Actually, technically ....

.... there is no such thing as an enquiry into an out of time year. S29 merely empowers HMRC to make an assessment where they make a discovery. Somewhere else (can't remember off the top of my head) empowers them to require information to be provided.

If you look at the letters you have received I'm sure you will see that this is the case.

 

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By User deleted
18th Jun 2015 14:57

Sch 36

Is where you want to start

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RLI
By lionofludesch
18th Jun 2015 15:15

Easier ?

Might it not just be easier - and earn brownie points - to just give them the information they want ?

Depends how confident you are that the figures are correct of course, but I'm not one for starting an argument where it's counter productive.

However - I would be pointing out that HMRC had no right to this information and this was provided purely out of the goodness of my heart.

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By mattydav
18th Jun 2015 15:23

ok, so technically its not an enquiry, but it is not yet a discovery assessment either. More of a warning that if we don't provide the info, the will raise an assessment. Quote - "any such assessments will be made under s29..."

If we don't provide the information required, wouldn't they just raise a discovery assessment anyway? In which case, the documents would have to be provided to them anyway.

 

 

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Replying to jonharris999:
Stepurhan
By stepurhan
18th Jun 2015 15:32

Only if valid

mattydav wrote:
If we don't provide the information required, wouldn't they just raise a discovery assessment anyway? In which case, the documents would have to be provided to them anyway.
If the discovery is invalid, then any assessment made on the basis of discovery would be invalid as well. They can't penalise you for not providing information you aren't obliged to give them.

But lionofludesch's suggestion that giving them the information (if it simply matches anyway) may be the quickest route to getting things finalised is a good one. As he said, make it clear that you do not believe that you are obliged to provide this information, and are only doing so to bring things to a swift conclusion. Appearing to accept their right to the information by providing it without comment risks opening you up to further requests.

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By mattydav
18th Jun 2015 15:33

lion

you are probably right. there is nothing to hide. just a matter of principle.

I was thinking of doing as you mention in your last paragraph - give them the info, but mention that they weren't strictly entitled to it.

thank you all for your help.

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By User deleted
18th Jun 2015 15:51

Why isn't the request valid, Stepurhan?

HMRC have the power to ask for the information. If they want it, they'll be able to get it.

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RLI
By lionofludesch
18th Jun 2015 16:33

Out of Time

I have, in the past, pointed out to HMRC that their request seems to be out of time and it has closed the enquiry.

Equally, where matters have been uncontentious and easy to collate, I've provided it, with a rider that we had no obligation to do so.

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By flurrymc
18th Jun 2015 16:48

Not an enquiry.

NO, NO and thrice NO! Heaven forfend that HMRC should open an enquiry out of time, they would never do such a thing!

However they can issue a notice to obtain information and documents if they are reasonably required for checking the taxpayer's tax position, without time limit. Definately not an enquiry, you ask any MP who voted in favour of the Finance Act 2008 schedule 36, and they will confirm

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By User deleted
19th Jun 2015 15:13

Clarification

FA 2008 Sch 36. In particular, para 21(6)

[EDIT - crossed with the preceding comment]

[Further EDIT - to correct typo referred to below]

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By MBK
19th Jun 2015 14:56

@BKD and @flurrymc

BKD - I think you mean para 21(6) - not 21(1)(6)

Sch 36 doesn't give them power to issue an information notice with impunity - they have to have good reason.

As the OP says, there is one very obvious reason why the dividend info may not tie up - which is the differing tax year ends. On this basis I would be saying to HMRC that their request doesn't meet the requirements of para 21(6) of Sch 36 and that they should go and waste somebody else's time.

But if goodwill means that providing the info is the easier route then fine. I would have gone that route in the old days when there were local districts and providing the info would buy goodwill, but that's no longer the case.

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