One of the aims of compliance checks is to improve record keeping, which HMRC consider to be a primary cause of incorrect tax returns.  The checks are also intended to ensure that taxpayers are meeting their statutory obligations with regard to record keeping.

Although they can use their information powers to ask to see non-statutory records, if they exist, the inspection powers contained in Finance Act 2008, Sch. 36 can only be used to inspect statutory records.  Schedule 36, para 10 states that:

‘An officer of Revenue and Customs may enter a person’s business premises and inspect business documents that are on the premises, if the inspection is reasonably required for the purpose of checking that person’s tax position.’

The definition of ‘business assets’, which can also be inspected using the powers in para. 10, specifically excludes documents and the definition of business documents states that:

‘“business documents” means documents (or copies of documents)

  • that relate to the carrying on of a business by any person, and
  • that form part of any person’s statutory records’.

The records that a taxpayer is required to keep by statute may be specific or non-specific.

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