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Tax compliance check section 9A Taxes Act

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My client personal tax return is being checked under Section 9Aof the Taxes Mgt Act for accuracy and completeness. HMRC is requesting for dividend breakdown from a ltd company in which the client is aco director and also requesting for the breakdown of the directors loan account from the all the comapnies the client is a co director.

Is this suppose to be or is this going beyound the scope of the compliance check which is meant to be on the return.

I await responses. thanks 

Replies (14)

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By Tax Dragon
21st Apr 2021 05:54

I vote no.

[Hey, I'm really getting the hang of these Aweb voting buttons now!]

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Replying to Tax Dragon:
RLI
By lionofludesch
21st Apr 2021 09:47

I vote no too.

Personally, I'm chuffed that they're getting stuck in to the abuse of DLAs.

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By Paul Crowley
21st Apr 2021 06:14

Seems reasonable enough
I would only provide annual totals, not monthly breakdown of DLA

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Replying to Paul Crowley:
By SteveHa
21st Apr 2021 08:46

Why? Surely if HMRC are concerned about a BIK amount, then they may be examining based on a strict calculation rather than averaging, or possibly even concerned that no BIK has been reported but the loan exceeded £10K at some point in the year.

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Replying to SteveHa:
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By Paul Crowley
21st Apr 2021 08:58

That is exactly why

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Replying to Paul Crowley:
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By Tax Dragon
21st Apr 2021 09:02

So, if such a scenario existed, would you withhold the raw data but make a prompted disclosure of the omitted income?

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Replying to Tax Dragon:
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By Paul Crowley
21st Apr 2021 09:39

Worry about it if it ever happens
Cannot remember the last enquiry asking for this
definitely more than 15 years ago

But in the old days HMRC always asked for monthly breakdown as standard on all company enquiries, whether relevant or not
Which meant bringing something into existence that did not exist before, just to complete a usually pointless checklist applied by HMRC

I was the only one giving the annual figures in the firm and HMRC never followed up

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Replying to Paul Crowley:
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By Tax Dragon
21st Apr 2021 09:43

Did not exist before - but maybe should have.

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Replying to Tax Dragon:
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By Paul Crowley
21st Apr 2021 12:16

If it should exist then surely it should be daily? Monthly could cover a lot of spikes

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By Matrix
21st Apr 2021 06:25

Yes. I don’t see why they are requesting records for a separate legal entity.

However if these can readily be provided and it would be in my client’s interest to provide them since they support the figures in the return, then I may recommend my client does so.

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Replying to Matrix:
By johngroganjga
21st Apr 2021 08:35

But aren’t they entities in which the taxpayer is a shareholder and might have paid him dividends? The DLA breakdown will enable then to confirm that all dividends and other income paid by a credit to the loan accounts have been entered on his tax return correctly.

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By lesley.barnes
21st Apr 2021 09:10

The only issue I would have with providing the information would be you say that the director is a co director in other companies. I would make sure that it is only a breakdown of his personal DLA account you provide and not any of the other Directors.

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By Tax Dragon
21st Apr 2021 09:40

Matrix makes an interesting point. If the director knows how much is owed to or by the company, then that information is in the possession of the director (per Sch36). Now, generally I can find out how much is in my bank account at any moment. However, rightly or wrongly (and with or without consulting with the director), accountants fiddle about with DLAs after year end. Which maybe does mean that the director might not know at any point what the state of play is. So is that information in the director's possession (ergo within scope of enquiry)? Or is it wholly a company record?

(Of course, there's a power to obtain clause in Sch36 too. Maybe this renders the question moot. Or maybe it doesn't - there's probably a whole other discussion to be had on that.)

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By RM and Co
21st Apr 2021 09:41

With any HMRC investigations, you can request a risk assessment sheet. Once you have that, the scope of what would be involved in that investigation will be clear. In this case it seems they are reasonable so far.

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