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HMRC "check of records" but client now incorporated - various considerations!

HMRC "check of records" but client now...

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An individual client of ours has been scheduled for a 9A TMA check of records (IT and VAT).

As usual, standard letter says they will be visiting her premises, and we have given the standard response of please come to us (we are only down the road).

However, they are looking into 2011-12 and in 2012-13 she ceased trading as a sole trader and incorporated.

Can they actually therefore ask to visit her premises? I realise this is pedantic and obviously I don't want to be difficult, but it's a genuine consideration. There's nothing to hide! 

Also, as the VAT number was taken over as TOGC, and is now the company's responsibility, is it correct for them to be approaching the ex sole trader for a records check? I thought all of the responsibility now lay with the new owner of the VAT number.

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By Steve Kesby
23rd Jan 2014 14:16

Information and inspection powers

Business record checks aren't (themselves) carried out under s 9A TMA 1970. They come form the information and inspection powers in Schedule 36 FA 2008.

They can attend business premises and request information if they give the appropriate notice. They can give notice to the company (under para 10) to attend its premises for the purposes of inspecting the sole-trader's business records.

As you say, if they don't do it completely correctly, but they're essentially acting within their powers it just aggravates the situation to not allow them access. They may not have picked up on the incorporation, and may be happy to come to you.

If they get into wanting to make adjustments territory on the income tax side, then you need them to issue a 9A notice so that you can contain (or have closed) what must, by that stage, be an enquiry in reality.

If you have a 9A notice then you've already got the protection, but the powers they have available to them still put you in the same position at such an early stage.

For VAT, all they really have are the information and inspection powers, together with the ability to raise an assessment to the best of their knowledge and belief.

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By Monsoon
23rd Jan 2014 14:37

Thanks Steve.


She has already had a records check phone call. The letter is headed "Check of Income Tax and VAT" and the body says "This check will be made under S9A TMA 1970." So, I am approaching it as an enquiry, though not sure if the letter qualifies as a formal 9A notice. Sorry for lack of clarity in my OP.

Thanks for confirming what I thought re premises - I don't want to be obstructive but it just popped into my head as a technicality. I'm all for making this as easy as possible! 

Presumably if they do make a VAT assessment, it will have to be to the new Ltd Co as they now retain responsibility for the VAT number.

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By Steve Kesby
23rd Jan 2014 14:48


If there's any VAT to assess it will now be the company's responsibility.

I'd be inclined to make them be a bit clearer about what formalities they're using. They can't check anything to do with VAT under s 9A (although they can use their information and inspection powers) and an enquiry is better in my view, because if it becomes protracted you can always apply to the FTT for closure.

The clearer they are about what formalities they're using is also an indication that they do actually know what they're doing.

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
23rd Jan 2014 15:26

Thanks. Yes I had wondered if there was a slight lack of clarity with formality. I will check. Thanks so much :)

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Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
23rd Jan 2014 15:59


The BRC was ages ago, I honestly can't remember - it was last summer at the absolute latest. I didn't do it, I would have encouraged my colleague to do it (it's her client) but I have a feeling the client did it herself because we just weren't given the knowledge to be able to answer their questions ourselves.

Certainly I don't recall anything adverse coming of it and we weren't advised of further action. I have asked the inspector to advise us of any particular areas of risk they are looking at. Still waiting to hear back.


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