Code of Practice 11 deals with self assessment tax investigations carried out by Local Compliance Offices into income tax returns.
They may be full or aspect enquiries.
A full Code of Practice 11 investigation is as it sounds; it is a tax enquiry into every point in the tax return.
Aspect enquiries are used when only three or four points are raised in the tax return.
Aspect enquiries can turn into full enquiries at any time so care must be taken in dealing with an aspect enquiry in order that it doesn’t turn into a full tax investigation.
If HMRC are querying your income tax returns then KinsellaTax can help you settle the enquiry.
Why put yourself through the stress of a Code of Practice 11 tax investigation on your own?
Call KinsellaTax NOW on 0800 471 4546. We will take away the anxiety and deal with your Code of Practice 11 tax investigation directly with HMRC.
HMRC, on occasions, select self assessment tax returns at random to run checks to see if anything is wrong which would not be apparent at first glance.
They can assess the last 6 years from the tax enquiry year but in some extreme cases they may access the previous 20 years under Taxes Management Act 1970 S. 36.
TMA 1970 S. 36 (1) reads:-
“An assessment on any person (in this section referred to as ‘the person in default’) for the purpose of making good to the Crown a loss of income tax or capital gains tax attributable to his fraudulent or negligent conduct or the fraudulent or negligent conduct of a person acting on his behalf may be made at any time not later than 20 years after the 31st January next following the year of assessment to which it relates.”
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If nothing is found to be wrong then HM Revenue and Customs will close the Code of Practice 11 tax investigation, but if something is found to be incorrect they will inform you of your revised tax liabilities.
HMRC, formally the Inland Revenue, may seek tax penalties for incorrect self assessment tax returns. When deciding upon a suitable HMRC tax penalty they will take into consideration the extent to which you disclosed information and the seriousness of your errors or omissions on your self assessment tax return.
A 100% tax penalty of the tax liability can be charged but reductions can be claimed, dependent on 3 factors:
HMRC will take into account what you did, how you did it, how long it went on and the amounts of money involved.
Remember, the less serious the offence, the bigger the reduction in the penalty.
HM Revenue and Customs do not generally prosecute for the Tax Evasion, but once you are under a Code of Practice 11 tax investigation and try to conceal or produce dodgy documents, HMRC will prosecute for the offence of ‘deceit’ and not the tax offence.
Many people who think they are under a Code of Practice 11 Tax Investigation, even where HMRC have indicated there will be no prosecution for the tax offence, still take the risk of being prosecuted for the offence of deceit.
HMRC recommend that you appoint a tax adviser to guide you through your Code of Practice 11 tax investigation.
Click here to see our advice regarding HMRC interviews
The First tip in dealing with any Inland Revenue Enquiry is to get expert advice before thinking of contacting HMRC or going to see them.
For expert help and advice with your Code of Practice 11 Tax Investigation contact KinsellaTax without delay on 0800 471 4546.