Does filing electronically increase the
risk of tax enquiry?
This year I have noted the following:
1.File SA2005 by internet;
2.Receive Enabling letter;
3.Tax repayments withheld/frozen; and;
4.S9a Notice issued.
Is this the dreaded benchmarking we have been warned of? Does filing electronically increase the risk of tax enquiry?
Dorothy Cotton
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Replies (4)
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No Goodwill At HMR&C's?
Mike, I'm quite aggrieved then if these letters are being enabled by way of people just ceasing self employment to trade as a ltd co.They amount to a final bite of the self employed cherry. Reading between the lines these 'Enabling Letters' are then a benchmarking technique and FBI must make it a whole lot easier to do? I feel that the Inspector concerned is trying to stop the practice offering this advice. That being to incorporate.Big challenges ahead for the practice it seems?
Why are you so worried?
Firstly, the enabling letter refers to the 2004 Tax Return. It is a national exercise conducted on the entries in a selection of self-employed taxpayers within a certain range, ie turnover. It pays no regard to how the was submitted.
Secondly, the tax repayment has been witheld because an enquiry has been opened, which is normal Revenue procedure. Again, it has nothing to do with FBI.
You may very well have legitimate concerns but you are linking things together that have no relation to each other.
As Mike said earlier, the enabling letter is a better indication of an enquiry than how you filed the 2005 Return. Having said that, none of my clients who received these letters have yet to be subjected to an enquiry.
"Why Are You So Worried"
Perhaps because the enabling letter is for 2005 returns filed in the last few months. Now could you elaborate further for me in way of an answer?
Thank You
No
It's what's on the return that makes the difference. This is very much the case with enabling letters, which aren't created at random in any circumstances (unlike some enquiries).
I would suggest that in this case the enquiry could very likely relate to the matter that was the subject of the enabling letter.