TALKING SHOP
of is that the records that you are keeping are sufficient for them to be able to draw up their tax returns properly in due course. HMRC do actually have powers to comment on taxpayer's records generally and will shortly be putting out guidance on what they see as adequate records. The timing of visits to taxpayers' premises is clearly
sensitive. In normal circumstances, HMRC are required to give seven day's notice. Naturally, though, they will not want to give such notice to a suspected fraudster, so they will also have the power to do unannounced visits. What is also changing is that those unannounced visits can be sanctioned internally by HMRC themselves, rather than requiring the external sanction of the Tax Tribunal, though in some cases HMRC will seek the Tribunal's approval to make their visit more formal. Timing will also be a factor in how quickly enquiries
are progressed. Both sides will no doubt want to get matter concluded as quickly as possible, and that is all to the good. But you still need to think before responding – to make sure you aren’t giving an explanation that is only half the story, or which could be misunderstood, in an effort to speed matters up. It would be all too easy to respond to a telephone enquiry from HMRC about a document with comments based on imperfect or distracted memory.
Penalties: just a hangover? The various powers bring with them various penalties. For example, whilst it is possible to refuse entry to a visiting Officer of HMRC, that will lead to penalties for obstruction if that visit has already been sanctioned by the Tax Tribunal. Even if it has not, an unreasonable refusal will lead to penalties. At the same time, there are safeguards built into the
It is understandable that they must have powers to
insist on visits – they are, after all, trying to catch the fraudster as well as check the generally compliant. However, they have the same powers available to manage both ends of this taxpayer spectrum and much will come down to their using the powers ' reasonably', as the system requires.
Anytime …? One thing to appreciate under the new rules is that HMRC will no longer have to wait for your tax return to be submitted before asking questions about issues that it covers. That form of power is already available to them in the context of VAT; however, it will now start to apply for income tax and corporation tax. This means that HMRC will be able to ask to see the books of the business during the year rather than wait until after the year end. Their guidance emphasises that they will not be expecting you to have everything written up perfectly – they accept that such things are not always possible in the real world. What they would want to be assured
ANYTIME, ANYPLACE, ANYWHERE”. THAT WAS THE SELLING POINT
FOR MARTINI; IT ALSO DESCRIBES THE NEW POWERS REGIME HM REVENUE AND
CUSTOMS WILL HAVE FROM APRIL 2009
• John Whiting is a member of the Chartered Institute of Taxation and chairs their Management of Taxes Committee.
www.tax.org.uk
MAY 2009 • FOOTWEAR TODAY • 13
powers, mainly in terms of what is becoming a well-worn word: 'reasonable'. If the taxpayer feels that HMRC is not being reasonable, then they have the ability to appeal to the independent Tribunal.
April Fool? These new powers are due to commence from April 2009. HMRC are busily producing guidance and are beginning to train their staff. The extension to HMRC's powers do need to be taken seriously and businesses need to be aware of them. It would be as well to think about how to handle the more serious information requests or visits that will undoubtedly start to flow from then onwards.
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