HMRC’s powers to open an enquiry into a return

By Tolley in association with Guy Smith of inTAX Ltd
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The following Corporation Tax guidance note by Tolley in association with Guy Smith of inTAX Ltd provides comprehensive and up to date tax information covering:

  • HMRC’s powers to open an enquiry into a return
  • Introduction
  • Correcting a return
  • Opening an enquiry
  • Amendments
  • Discovery
  • Large companies
  • The single compliance process (SCP)

Introduction

An important clarification needs to be made to help in the understanding of this note. Whilst the legislation refers to an ‘enquiry’, HMRC now refers to enquiries as ‘compliance checks’.

As this note specifically covers HMRC’s powers, the term enquiry has been used to match up with the language used in the legislation. However, some of the other material referred to, such as factsheets, include the term compliance checks rather than enquiry.

For the purpose of this note, an enquiry and a compliance check have the same meaning.

An HMRC officer has the power to correct a return or open an enquiry and each of these processes are discussed in turn below.

Correcting a return

An officer can, within 9 months of receiving a corporation tax return, amend it without opening an enquiry in order to correct:

  • an obvious error or omission. ‘Obvious’ means that there can be no doubt what the correct entry should be. This could include correcting arithmetical errors and errors of principle
  • anything else that the officer has reason to believe is incorrect based on information already held and where no further information is needed.

FA 1998, Sch 18, para 16

There is no right of appeal against a correction but there is a right of rej

More on HMRC powers in relation to compliance checks: