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Where Taxpayers and Advisers Meet

Compliance check time limits

AnthonyR
Posts: 204
Joined: Wed Feb 08, 2017 2:33 pm

Compliance check time limits

Postby AnthonyR » Mon Mar 12, 2018 3:39 pm

A friend of mine has asked my opinion on an HMRC compliance check that seems to be out of time.

The letter is dated March 2018 and relates to the 2015 tax return which was filed on 31 Jan 2016 (ie on time).

Having looked at it, he missed a P11D benefit from his tax return, meaning HMRC are correct in their assertion that he underpaid about £1000 in tax.

However, the question is whether they have the right to check and ask about this. Surely if this is really a s.36 enquiry then they should have notified by 31 Jan 2017 and so they are about a year late on this?

Am I right in thinking that he can just tell HMRC to go away as they are out of time, or is there something I'm missing? Seems like a simple fishing exercise hoping he'll just pay up without asking any further?
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

bd6759
Posts: 2839
Joined: Sat Feb 01, 2014 3:26 pm

Re: Compliance check time limits

Postby bd6759 » Mon Mar 12, 2018 9:50 pm

They are out of time to enquire into the return. That means they cannot amend the return or the self-assessment.

However, they have discovered that income has not been assessed. They have the right to assess that income. (s29 TMA).

If your client refuses to help, they will assess the tax and charge a minimum 30% penalty.

wamstax
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Re: Compliance check time limits

Postby wamstax » Mon Mar 12, 2018 10:18 pm

My question here is when did the discovery arise? If before the time limit for an enquiry then there might in fact not have been any discovery within the terms of S29. What happened if anything after 31-01-2017 that changed the HMRCs knowledge as regards omission of benefit in kind?
regards and hope this helps
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bd6759
Posts: 2839
Joined: Sat Feb 01, 2014 3:26 pm

Re: Compliance check time limits

Postby bd6759 » Mon Mar 12, 2018 10:26 pm

Its not quite as simple as that. The test in not when the discovery was made, but whether information given in the return drew attention to the insufficiency. Which is clearly no the case here. (if the return said "I have not included the BIK because I do not beleive it is taxable", HMRC could not rely on s29(5).)

In any event, s29(4) is likely to apply.

AnthonyR
Posts: 204
Joined: Wed Feb 08, 2017 2:33 pm

Re: Compliance check time limits

Postby AnthonyR » Wed Mar 14, 2018 1:18 pm

Appreciate the points above, but playing devil's advocate, does the fact that they had the P11D nearly 3 years ago mean that they haven't discovered the fact there should have been a benefit assessed on the tax return as they've had the info for 3 years?
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

bd6759
Posts: 2839
Joined: Sat Feb 01, 2014 3:26 pm

Re: Compliance check time limits

Postby bd6759 » Wed Mar 14, 2018 8:17 pm

Appreciate the points above, but playing devil's advocate, does the fact that they had the P11D nearly 3 years ago mean that they haven't discovered the fact there should have been a benefit assessed on the tax return as they've had the info for 3 years?
No. Information has be be made available in the return, or in the previous return. You cannot suggest that every officer of HMRC knows what information is held on every return submitted by every entity, and knows all of the information held that relates to the person whoses return they are looking at?

Judge Walton said
"..and it is idle for any taxpayer to say to the Revenue, 'Hidden somewhere in your vaults are the right answers: go thou and dig them out of the vaults'. That is not a duty of the Revenue."


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