Tax & Accounting News

HMRC Powers

20/10/2008

Time is rapidly ticking away to the introduction of a new, “get tough” regime by HM Revenue and Customs (HMRC).

From 1 April 2009, HMRC’s power to obtain information and documents will be extended and will also include new powers to inspect business premises. The new rules mean that:

• HMRC will be able to ask taxpayers for documents and information that is “reasonably required” to check their tax position, even where no tax return has been made or before a tax return is due. The consent of the First or Upper Tier Tribunal (which will replace the General and Special Commissioners from April 2009) will not be required.
• HMRC will have the power to require third parties to provide documents and information relevant to a taxpayer. HMRC will need approval from the First Tier Tribunal for the notice to be issued unless the taxpayer agrees to its issue.
• The HMRC notice to a third party can include documents going back further than the previous six year limit on documents, which would have previously been excluded from an HMRC request.
• HMRC officers will be able to inspect information at business premises, and the premises themselves, that are occupied by the taxpayer. This power does not apply to premises, and parts of premises, used for residential purposes.

Taxpayers will be able to appeal against an information notice to the First Tier Tribunal within 30 days of the taxpayer or third party receiving notice. However, no appeal can be made where information or documents relate to statutory records.

If an inspector requests the approval of the First Tier Tribunal, the request will be heard without the taxpayer, who will not be allowed to make representations.

Notices to third parties can be appealed on the grounds that the notice is onerous but no appeal can be made where the notice was approved by the First Tier Tribunal or the notice or information forms part of statutory records.

Penalties for non-compliance with an information notice or obstructing an inspection (although only where HMRC has the approval of the First Tier Tribunal for the inspection) include an initial £300 penalty, with a £60 a day penalty for continuing non-compliance.

Barry Lewis, senior partner at Harris Lipman, said: “Taxpayers will be waiting with interest to see how the HMRC puts these powers into effect from April 2009. As the saying goes, ‘With great power comes great responsibility’, so there is sure to be considerable interest in whether HMRC uses these wide-ranging powers wisely and well.”

Please do not hesitate to contact us for further information.