HMRC have launched a new online interactive tool to help taxpayers understand tax compliance checks. Whilst this can help provide some clarity particularly for unrepresented taxpayers, the tool cannot take into consideration every unique aspect of an individual’s position, so it should always be used with caution.
What is an enquiry or compliance check
HMRC can check into any tax return you file, whether that’s a self assessment tax return, corporate tax return, VAT return, or any other kind of tax filing. The manner in which HMRC ‘check’ into your return can be informal in nature, or within the permitted time frames they can open a formal enquiry.
There may be a reason HMRC are checking into a return – for example HMRC hold information that does not match up to the figures that have been filed, or figures have been input into the incorrect boxes on a tax return, or the most recently filed return does not meet HMRC’s expectations based on previous returns – or a check can be random.
HMRC will check into returns to ensure that the right amount of tax has been declared and paid. You should receive notice of the check or enquiry by letter.
If you receive a letter asking for more information about a tax return you have filed, the new compliance check tool might be able to help you with some of the more generic advice, but an adviser should always be consulted if your tax affairs are complex or you have any concerns about the validity of the notice.
What the compliance check tool can do:
The tool allows you to select what you need more help with, and it is primarily a tool to help point you in the right direction to other HMRC help pages, as well as provide some new and informative YouTube videos.
The videos available cover topics such as how compliance checks work, what to expect during the check, and what to do if you disagree with HMRC tax decisions or penalty assessments.
The links to other HMRC web pages can be useful as well, particularly if you are looking for guidance on how to appoint an agent or representative, what help you can get from HMRC if you need extra support, and information on voluntary organisations who might be able to help you. There are also links to pages that explain the standards HMRC are expected to maintain, and how you can complain about HMRC if you feel they have not met those standards.
What the compliance check tool cannot do:
Whilst the tool offers a lot of useful explanations and guidance, the tool cannot be used in an interactive way to help you with your specific circumstances beyond pointing you to other government websites and videos.
For example, there is a section on what you need to do if you can’t pay your tax bill on time, but it does not immediately provide the contact details to contact HMRC about this, and nor does it explain what information you might need to prepare in advance if you are looking to set up a payment plan with debt management.
There is an explanation on the types of penalty you might have been issued and any reductions to the penalty that HMRC have offered, but the explanation does not provide information on the underlying errors or omissions that will have led to the penalty in the first place, and therefore it may not obvious if the penalty percentage HMRC have chosen is appropriate.
If HMRC have asked for more information, the guidance on the compliance checker tool simply says send the information. Whilst it alludes to the fact that you should comply with formal information powers (Schedule 36 notices), there is no mention of the fact that you may not need to send all the information requested by HMRC if it is not reasonably required for checking your tax position. If HMRC have asked you to send a lot of information and you are concerned that this is not reasonably required in the circumstances, you should consult a tax adviser to help advise on whether the request should be complied with in full or not.
It is also important whenever you receive a formal notice from HMRC of an enquiry or an assessment that you check the date on the letter, as HMRC only have certain time limits to enquire into a return or to raise tax assessments.
When to seek additional support
Whilst the tool can therefore offer some simple explanations of HMRC processes, you should always seek specialist advice if you are still unsure how to respond to an HMRC letter. If you are not sure if HMRC’s requests are excessive, or if you have received a tax or penalty assessment and do not understand how HMRC have arrived at those figures, it might be time for some professional support.
If you need help understanding correspondence from HMRC, or HMRC have enquired into your or your business’s tax affairs, consult our team of experts at Menzies for a free, confidential consultation call:
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