What is a Compliance Check?

 

HMRC carry out compliance checks to make sure that taxpayers are complying with their obligations, paying the right amount of tax at the right time and claiming the correct reliefs and allowances.  They may do this, as they do at present, by asking for information and documents or by arranging a meeting or visit.

 

While they have always been able to request a visit to the business premises or ask for an interview, they now have the power to visit business premises to inspect the premises, the business assets and the statutory records.  The position continues to be that HMRC cannot insist on interviewing taxpayers.

 

The powers contained in Finance Act 2008, Sch. 36 enable HMRC to carry out compliance checks across taxes.  Where a risk is identified in an area of taxation in which the officer has no expertise, they will be able to call on additional resources to deal with the matters that they cannot deal with themselves.

 

HMRC officers are encouraged to consider a multi-disciplined, joint case-working approach where appropriate so that they can address several risks at the same time.  This means that there are likely to be several officers working together on a compliance check, visiting premises to inspect them and issuing comprehensive information notices to gather the information required to check different taxes.

 

The process of Compliance Check

A compliance check can be carried out either before or after a tax return has been submitted.  Although HMRC has the power to carry out pre-return checks for the purposes of PAYE and VAT before the introduction of the inspection powers contained in Finance Act 2008, they had no such powers relating to income tax, capital gains tax and corporation tax.

 

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