Time Limit to Investigate?

Time Limit to Investigate?

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A Tax Return for year ending April, 2011 was filed electronically on 30th December 2011. This was a tax payer on PAYE who received a final salary which included compensation of £37,000. The return was completed showing a tax free compensation sum of £30,000 (all other figures based on the P60 and P11d). After 3 months deliberation and a conversation with myself going over the entries made on the return,  the tax office finally returned the overpaid tax.  Then on 8th August 2013 the tax office decided they were investigating the return under Section 29 of the Taxes Management Act 1970. Am I right in saying that  there is a 12 month limit (after the date the return was submitted) in which the tax office could look into it?? Thus giving tax payers closure!  I have stated this to the Tax Inspector and he only keeps coming back saying he is 'looking into under the above section etc'.

Help

Scottie

Replies (10)

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By stratty
31st Oct 2013 11:00

Discovery Assessment

http://www.hmrc.gov.uk/manuals/eimanual/eim71415.htm

Perhaps HMRC are aware of something that you are not?

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By tonyh
31st Oct 2013 11:11

Omitted

He will have to prove that there is a material fact omitted from tax return.

To late for the £30k unless you have not given full facts on return.

 

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By Alan Ferris
31st Oct 2013 11:31

S29 is Discovery

Under S29 the officer can raise a discovery asessment, but there are rules he needs to follow and I would simply be asking him on what grounds he beleives he can raise a discovery assessment.  They should make clear what they beleive is wrong for them to have discovery.  If he fails to do this then you need do nothing.  He will then have the choice of raising the discovery assessment (which is appealable and on which you can ask for a review) or he can walk away.

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By The Black Knight
31st Oct 2013 11:43

has to have

the inspector has to have discovered a loss of tax!

ask him what loss of tax he has discovered?

It's not a fishing expedition.

HMRC recently explained "it was a chicken and egg situation, they could not know unless they looked first"

on your bike!

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By julian.sims
31st Oct 2013 11:43

Discovery

s29 TMA deals with the discovery provisions, rather that the normal enquiry window of 12 months which is dealt with at s9A TMA.

You are therefore operating in a different field to the standard enquiry.  If you feel comfortable that the officer does not have grounds under the discovery provisions to raise an assessment, then you could suggest he proceeds to do so and argue that any assessment is invalid.  Whether he can assess based on discovery may well depend on what was disclosed on the Return.

It is then up to the officer to either do so or use Sch 36, FA'08 information powers to obtain further information.  Where a return has been submitted, these do not normally apply, but are extended where enquiry already open or officer has reason to suspect that tax underassessed.

Your approach needs to be somewhat tactical depending on the the strength of your case how the officer proceeds.

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Replying to Marion Hayes:
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By EB
31st Oct 2013 13:08

Discovery

Many thanks for all the comments.

As I understand it?-

A tax return was completed showing salary (in employment box as per P45) plus benefits of Company car fuel and medical insurance, less allowable expenses. Under Income on Main Return interest and pension receipts were shown. Under Other Income the redundancy and compensation figure was included (in total) with the exemption of £30,000 entered seperately in the appropriate box.  Return submitted December 2011.

In March 2012 ALL these entries were discussed with the Tax Office in detail before the overpayment of Tax was refunded..

Am I right therefor in stating to the Inspector that:

1) The enquiry window was closed.

2) All entries on the Return had been made clear to the Tax Office (which he acknowledges but states 'that this does not constitute an inspector formally looking into the case as an enquiry')?

3) All information was therefor made available to the Tax Office before this enquiry window was closed.

My thanks in advance,

Scottie

 

 

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Replying to ser1es:
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By The Black Knight
31st Oct 2013 14:53

Ultra vires

EB wrote:

In March 2012 ALL these entries were discussed with the Tax Office in detail before the overpayment of Tax was refunded..

Sounds like they conducted and concluded an enquiry without the proper notices?

Tell them they are exceeding their powers........and complain.

 

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Stepurhan
By stepurhan
31st Oct 2013 12:11

Misuse of discovery

Some HMRC inspectors seem to see discovery as simply what they cite if they want to open an enquiry outside the normal window. In fact, two criteria must be met to allow a discovery enqury to be opened.

HMRC must come into information after the enquiry window has closed.The information must be such that they would have opened an enquiry within the window if they had it in time.

If they don't meet BOTH of those requirements, no discovery and you can tell them to take a running jump.

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By julian.sims
31st Oct 2013 14:37

Discovery - 'reasonably expected'

You seem to have a reasonable chance but the key will be whether the officer should have been expected, based on information available to him, to have been aware of the underassessment.  The important point for this to be considered is 31/1/12 (normal enquiry window) according to s29(5)(a) so he has to allow for the information you gave him informally(s29(6)(c).

My concern would be that he also has information from employer / elsewhere, which does not count under s29(6), and which has influenced his view.  This type of information could provide the grounds for the discovery assessment being valid as not provided by the taxpayer.

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By Martin B
31st Oct 2013 17:17

Discovery Assessment

flagging

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