Concluding the compliance check

By Tolley
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The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Concluding the compliance check
  • Prior to closure
  • Contract settlements
  • Letter of offer
  • Letter of acceptance
  • Settlement deed
  • Payment of liabilities
  • Closure of compliance check by closure notice
  • Closure notice where no agreement reached
  • Interest

With regard to terminology, this guidance note uses the term ‘compliance check’ in line with HMRC’s current practice. However, the term ‘enquiry’ is still used in the legislation referenced below.

HMRC will close a compliance check into a tax return once it has successfully addressed the perceived risks (with or without the agreement of the company / adviser). These risks will normally have been identified before the check began and as the check progresses.

HMRC may have found nothing wrong with the tax position being checked or may have found an inaccuracy. During the check HMRC should normally have asked for interim payments of late paid tax and considered the position regarding interest and penalties.

If the check is closed without any inaccuracy being identified, HMRC must send a notice to the company that the check is complete.

CH275000

If the compliance check has been carried out on the telephone, the HMRC officer should confirm closure as part of the call. It is good practice to ask for confirmation of this in writing and HMRC should always write to a company or adviser if requested. However, a formal check should only be concluded via a closure notice, contract settlement or settlement deed.

Where an inaccuracy has been identified, checks to CTSA returns will be closed either through an invitation to amend the return and a closure notice, through a contract settlement or a settlement deed.

For other compliance checks, the closure will vary according to the nature of the check. This can include, in the case of a pre-return check, the issue of a letter summarising the action needed to be taken by the company.

In closing a compliance check, HMRC should follow its litigation and settlement strategy (LSS). This means that it should not pursue weak arguments but can seek full settlement or pursue to litigation where it has

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