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Background
Aim
Previous consultations
Key features
Impact
Timeline
Our view

Background

As part of its wider review of 'Modernising Powers, Deterrents and Safeguards' HMRC has published a further consultation document covering the next stage of its information powers and compliance checks for:

• insurance premium tax
• environmental taxes
• stamp duty reserve tax
• inheritance tax
• petroleum revenue tax

Aim

FA 2008 aligned information powers, inspection powers, assessment time limits and record-keeping requirements, for income tax, capital gains tax, corporation tax, VAT and PAYE which it is anticipated will have effect from 1 April 2009.

Subject to this further consultation, the aim is to extend these new powers to the taxes listed above.

Previous consultations

The consultation document follows a number of previous consultations covering compliance checking:

• March 2005: 'HM Revenue & Customs and the Taxpayer: Modernising Powers, Deterrents and Safeguards
• March 2006: 'HM Revenue & Customs and the Taxpayer: Modernising Powers, Deterrents and Safeguards: The Developing Programme of Work' (this sought initial views on HMRC's compliance checking activities)
• May 2007: 'HM Revenue & Customs and the Taxpayer: Modernising Powers, deterrents and Safeguards: A new approach to compliance checks
• January 2008: HM Revenue & Customs and the Taxpayer: Modernising Powers, Deterrents and safeguards: A new approach to compliance checks: responses to consultation and proposals' together with draft legislation and guidance.

Key features

Schedule 36 FA 2008 provides the legislative framework for aligned information powers and compliance checks the key features of which are:

• HMRC officers to be able to issue 'taxpayer notice' to obtain information and documents for the purposes of 'checking the taxpayer's tax position' Replacement of ITSA, CTSA, VATA, & Section 20 TMA 1970 information powers.
• The concept of checking a taxpayer's 'tax position' includes past, present and future liability to pay any tax.
• 'Third party notice': Power to obtain information and documents from a third party, such as a bank, possibly an employer, subject to certain safeguards.
• An officer may make an 'informal notification' that a document is (or is likely to be) subject to an information notice. There will be monetary penalties for non-compliance.
• Criminal sanction for concealing, destroying or disposal of documents after receiving an information notice (or following an informal notification).
• Power to inspect business premises for the purpose of checking the tax position of any person.
• Inspection on either written notice or by/with agreement of 'authorised officer of Revenue & Customs'.
• Power for HMRC to specify when and where documents are produced for inspection.
• Power for HMRC to carry out in-year inspections during an accounting period and before tax return is filed.
• Power to remove documents.
• Alignment of time limits for the assessment of the taxes across CT, IT, PAYE, NIC and VAT.
  
  
  
  
  
  

Impact

Only those businesses which are already within the regime for these taxes will be impacted.

Timeline

Subject to the consultation the new information powers and compliance checks would be extended to these other taxes through Finance Bill 2009 and are anticipated to take affect from 1 April 2010.

HMRC has invited comments by 13 February 2009 and will be inviting taxpayer representatives for these taxes to meet with the Review team. Responses should be sent to HMRC Review of Powers: compliance checks, Room 1/72, 100 Parliament Street, London SW1A 2BQ.