HMRC’s compliance checking powers enable them to carry out examinations of contemporary business records to check that they are adequate and comply with the statutory record-keeping requirements. Any errors can be discussed and corrected to avoid the submission of an incorrect tax return. Where an examination shows that there is the likelihood of something being dealt with incorrectly, the officer will be able to offer advice on the correct treatment before the tax return is submitted.
HMRC envisage that pre-return checks will be carried out:
As with any compliance check, a risk must have been identified before a pre-return check can be carried out unless the taxpayer has asked for a check or it is being carried out as part of HMRC’s random enquiry programme.
There are some specialised information and inspection powers that were not repealed by Finance Act 2008, Sch. 36. Where these powers remain, they should be used instead of the Sch. 36 powers and it would not be appropriate for HMRC to carry out a pre-return check. This will be covered in more detail in the Legal Background division when that division has been amended for the new provisions.