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HMRC have published details of a new dialogue process they intend to use when undertaking enquiries.

Following a period of consultation HMRC have recognised the need to improve communication, particularly where additional burdens may be felt by taxpayers and their agents as a result of a formal enquiry into tax affairs. Proposals are currently being tested for a different approach to communication during a formal enquiry under a new policy called ‘Openness and Early Dialogue’.

"Openness" means that HMRC will advise taxpayers and any agents acting on their behalf whether the enquiry is full or aspect; and why it has been opened.

"Early Dialogue" is a different process which is likely to have more impact on a full enquiry than an aspect enquiry. It will, however, help the focus of aspect enquiry where complex tax issues or commercial transactions are under review.

At the start of the enquiry, HMRC will aim to agree with the taxpayer and/or their agent an explicit, though flexible, timescale for:

• an initial meeting, or a telephone call in certain cases;
• the production of information and documents;
• the records examination; and
• a discussion of findings.

It is possible that some of these steps will be achieved on the same day.

An agenda for the meeting, adapted where there is no agent acting, would include:

• introductions by those present to include an explanation of their roles and responsibilities;
• an explanation by HMRC of the enquiry process from the review of the records through to closure;
• a description from HMRC of why the enquiry was opened;
• details of HMRC’s requirements and the opportunity for the taxpayer to make a further declaration if appropriate;
• a description from the taxpayer or agent of the nature and running of the business, the record keeping system, and any other relevant matters;
• details from the agent of the work carried out to produce the figures on the return from those presented by the taxpayer and any accountancy points not dependent on the records;
•  a discussion of the records kept and agreement of those to be reviewed, including a detailed explanation of why any non-business records have been requested; and
• an outline timetable for future actions and responsibilities for those actions.

Not attending a meeting will not, in itself, be seen as a lack of co-operation.

Following the initial meeting, HMRC will carry out a review of the appropriate records which may be followed by a further meeting to discuss the findings. At this second meeting the taxpayer and any agent acting will be given an opportunity to answer any questions or concerns arising from the record review. Agreement should then be reached either about the actions required or that the enquiry can be closed.

Link

HMRC: Openness and Early Dialogue in enquiries