HMRC\u2019s powers enable it to check whether your tax returns are correct. HMRC uses the term \u2018compliance check\u2019 to cover all types of enquiries, investigations and visits to business\u2019s premises.<\/p>\n
For individuals and trustees, the most common type of compliance check is an enquiry focusing on a specific tax return. This is opened within 12 months of the return\u2019s submission, unless it was submitted late. HMRC requests information and documents to enable it to check any aspect of the return (including the original cost of assets sold) and to ensure the return is complete. When it completes its enquiries, HMRC usually issues an \u2018enquiry closure notice\u2019 to either confirm that the tax return requires no amendments or to amend it.<\/p>\n
In other cases HMRC may use its powers to obtain information and documents before issuing \u2018discovery\u2019 assessments to collect income tax or capital gains tax (CGT) for past years.<\/p>\n
In some cases HMRC\u2019s Fraud Investigations Service may open Code of Practice (COP) 8 or 9 investigations.<\/p>\n
COP9 is used for cases of suspected fraud or deliberate errors.<\/p>\n
COP8 tends to be used for cases where fraud is not suspected so the problem is more likely to be a technical issue, for example whether someone needs to pay tax in the UK.\u00a0Both these investigations can be lengthy and may end in civil (rather than criminal) settlements.<\/p>\n
For a COP9, HMRC only allows 60 days for an individual to decide how to respond: admit deliberate errors and disclose what went wrong; or deny fraud. The risk is that failing to tell HMRC of deliberate errors or failures may result in prosecution, so getting advice from a specialist tax advisor<\/a> quickly after receiving HMRC\u2019s opening letter is essential.<\/p>\n If you face a criminal investigation then you need a specialist solicitor\u2019s <\/a>help immediately.<\/p>\n The following tips will help you to deal with enquiries or civil investigations into income tax or capital gains tax.<\/p>\n Helen Adams TEP is Tax Principal at BDO LLP in London, UK<\/a><\/strong><\/em><\/p>\nSeven tips for dealing with compliance checks<\/h2>\n
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