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HMRC Enquiries Update Neil Tipping CCH Senior Tax Consultant Current Issues HMRC Information Powers Single Compliance Process Alternative Dispute Resolution Business Record Checks Legislation – Schedule 36 FA 2008 Powers To Obtain Information and Documents Powers to Inspect Premises and Other Property Further Powers Restrictions on Powers Appeals Against Information Notices Special Cases Penalties Offences under the Criminal Code Statutory Records What are “Statutory Records”? — — — — — S.12B TMA 1970 CH11200 – General CH11300 – Businesses CH11400 – Company Records VAT Notice 700 and 700/21 Power to obtain information and documents Taxpayer Third Notice Party Notice Approval of Notices Copying Third Party Notice to Taxpayer Identity Unknown Notices Time Limits to Comply Producing Copies of Documents Power to inspect premises and other property Business premises — Assets — Documents — Premises Power to Inspect Premises of Involved Third Parties Power to inspect premises and other property Power to Inspect Premises used in Connection with taxable supplies Power to Inspect premises for valuation purposes Tribunal Approval Penalties Further powers Power to Copy Documents Power to remove Documents Power to Mark Assets and record information Restrictions on powers Documents not in person’s possession or power Types of information — Pending appeals — Journalistic material — Personal records (i.e. personal health material) Old Documents Taxpayer notices following return Deceased persons Legal Professional Privilege Auditors (but . . . para 26 sch 36) Tax Advisers (but . . . para 26 sch 36) Appeals against information notices Statutory Records? – you can’t appeal Third party notices Identity unknown notices - onerous? Procedure — In writing — Within 30 days of date notice is given — With grounds for appeal Special cases (1) Supply of Goods or Services — No requirement for consent to approval for 3rd party notices — No right of appeal against such a notice Involved FA2008) third parties (defined in para 61A sch 36 — No requirement for approval — No requirement to copy third party notice to taxpayer — Can be appealed against on any grounds apart from where that person’s statutory records requested Registered Pension Schemes Special cases (2) Groups of Undertakings Change of Company Ownership Partnerships Herd Basis Counteraction Notice Recipients Penalties (1) Failure to Comply or Obstruction Daily Penalties Inaccurate Information or Documents Concealing/Destroying Documents — Following information notice — Following informal request Penalties (2) Failure to comply with Time Limit Reasonable Excuse Assessment Time limits Right of Appeal Tax Related Penalty Offences under the criminal code Concealing Documents following formal notice Concealing documents following informal notification Fine or imprisonment Single compliance process (SCP) What is it? How will agents and clients be affected How should they be dealt with by the agent community SCP levels of enquiry The four levels of enquiry are : Correspondence only with no need for on-site inspection or face to face meetings Simplified and faster route where lower intensity of face to face intervention may be required More technically involved cases where a broader understanding of the business is required. The most complex cases such as those involving aspects of evasion or where there are high levels of complexity SCP stages There will be 5 distinct stages for the SCP, most of which will be invisible to the taxpayer - these are: Planning – Initial risk review and consideration for cross-taxes treatment Contact – Formal enquiry notices and information requests issued Process – review of information, dialogue with taxpayer and/or agent, on site records reviews Resolve – The purpose of this stage is to follow settlement procedures in order to bring the correct tax into charge. Close – finalisation of paperwork and onward referral to any specialist risk teams if necessary (i.e. National Min wage, CIS review teams etc.) Current issues Consultation Use of Email Openness and Early Dialogue Opening Approach Implementation Alternative Dispute Resolution (ADR) Background Aims What issues does it deal with for Agents and Clients? Alternative Dispute Resolution (ADR) Cases potentially suitable for ADR may involve any of the following features: Facts which are capable of further clarification Disputes that may benefit from obtaining more suitable evidence Fact and/or technical matters in which there is legitimate scope for any party to obtain a better understanding of the other’s arguments Issues which are capable of further mediation and settlement by agreement within the framework of the Litigation and Settlements Strategy (LSS) Alternative Dispute Resolution (ADR) Cases not suitable for ADR may involve any of the following features: Cases which cannot be legitimately settled within the parameters of the LSS other than by litigation Issues which require clarification in the wider public interest. These might include matters of industry wide application Issues linked to or involving co-ordinated appeals issues (‘Stood behind’ cases) e.g. ‘Compound Interest’ type disputes Cases that could only be resolved by an HMRC departure from its established technical or policy view Alternative Dispute Resolution (ADR) If you are involved with enquiry cases where either the case is going nowhere and/or communication between HMRC and the client has broken down, please consider recommending that the case be referred to ADR To do so, the agent merely needs to register the case with the ADR team by telephone on 01492 523747 giving the name of the client and tax reference plus the name of the caseworker Business Record Checks (BRC) What are they? What happens during a BRC? Why were they suspended earlier in the year? What problems were encountered during the trial phase? What are they being replaced with? Business Record Checks (BRC) Level 1 – Educational Tools Level 2 – Targeted Assistance Level 3 – Leverage Exercises Level 4 – BRC checks Level 5 – Full audit/intervention