Cross-tax checks under the new HMRC powers
Simon Sweetman outlines the procedure for cross tax checks and offers best practice advice for those facing investigations.
Some recent pieces (even on this site) seem to indicate that many people have been very slow to realise that the new HMRC powers are there for a purpose, and that the way that HMRC does enquiries is intended to change substantially. It will take time, because there are staff to retrain (and in some cases to re-programme) and new and different management structures, but it is happening, and preparing yourself for old-style enquiries may not be to the point.
One of the new approaches is the cross tax check. This began with the idea of avoiding the ‘three visits in a year’ type of scenario, where the VAT man goes away and employer compliance turn up the week later, but has been developed from there. Cross tax checks are coming - indeed they are already here, and are likely to be the main approach to small business enquiries in future....
Continued...
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One visit
I have always been a great advocator of the one visit approach. An audit style visit to check the records doesn't sound too bad. However when you link it with the con. doc. giving HMRC powers to go through Accountants working papers, e-mails, phone records etc. it could create absolute mahem.
It looks like the Human Rights Act will be severely tested.
Cross-tax checks under the new HMRC powers
A very timely post, as one of our clients sent us a letter last week that it had received from HMRC giving notice of just such an enquiry. We note your use of the words “can do” in the third last paragraph, when referring to the action that HMRC might take to inform the agent. We can confirm that in our client’s case the Inspector chose not to inform us at all and left it to the taxpayer to do so. Is this another case of leaving it to the discretion of individual Inspectors and expecting them to be reasonable?