Investigation matters

Matters for review

HM Revenue and Customs

In the 2004 Budget the Chancellor announced that Customs & Excise and the Inland Revenue would be integrated into a single department, HM Revenue & Customs (HMRC). HMRC brings together the activities of Customs & Excise and the Inland Revenue - its role encompasses the collection of taxes, payment of tax credits and border control. The existing powers and taxpayer rights for individual taxes and duties transfer into HMRC without any changes. Although all HMRC officers will in law be authorised to use all HMRC powers, initially officers of the former Customs & Excise will generally continue to deal with VAT, excise and customs duty matters while officers of the former Inland Revenue will continue to deal with income tax, corporation tax and tax credits matters. However, HMRC will be piloting different ways of working for the future.

These pages will be further updated to reflect the operation of the new department once it is fully established.

At each stage of an investigation different matters will need careful review to enable the Practitioner to:

• consider critically HMRC's assumptions and proposals, and
• represent his client's interests effectively.

HMRC are given absolute discretion in deciding which businesses to investigate and have extensive powers to demand information in the course of an investigation. Inspectors need give no reason for carrying out an investigation but they can be challenged before the Commissioners to show that any information demanded is reasonably required.

The stages through which the inspector will aim to progress an investigation are:

• Selection
• Critical Review
• Interview
• Further Action
• Business Economics Exercise
• Means Test
• Settlement

The inspector's progress through these stages will be monitored by his manager for quality control purposes; it will assist the Practitioner to know what the inspector is expected to achieve at each stage, what powers he has and what part the Practitioner should play to protect his client's interests.

It will help to control the work in the Practitioner's office if he makes an investigation plan and keeps a note of the following matters:

• how up to date are the tax returns - what was the last return sent in?
• what are the most recent accounts sent to HMRC?
• what appeals are open
• the dates for any Commissioners' hearings
• the date of the last action
• payments on account made in the course of the investigation