Negotiating the outcome

By Tolley in association with Lesley Fidler of Baker Tilly

The following Corporation Tax guidance note by Tolley in association with Lesley Fidler of Baker Tilly provides comprehensive and up to date tax information covering:

  • Negotiating the outcome
  • Agreeing the liabilities
  • Grossing up or not? Who pays what?
  • Contract settlement
  • Final steps

Dealing with the irregularities that may arise from an employer compliance check requires a good working knowledge of the applicable legislation and practice. Arguments based solely on concepts such as fairness and reasonableness are unlikely to carry much, if any, weight with HMRC. However, it should be borne in mind that although employer compliance officers see a wide range of businesses and are experienced in identifying areas where weaknesses commonly occur, they are not technical experts and can misinterpret legislation.

Agreeing the liabilities
  • If HMRC considers that there are inaccuracies giving rise to underpayments, it should issue factsheet CC/FS6 ‘What happens when we find something wrong’ .

When compliance officers are certain of their position, they will also provide schedules of:

  • tax and NIC understated
  • interest from the due date to the actual or estimated payment date with credit for earlier payments on account

In the most straightforward cases, these will be issued under cover of a single letter alongside the notes of the meeting. In other cases, the schedules will only be prepared once further facts have been established.

These schedules need to be checked to ensure the computations are sound and based on the principles that have been agreed for, eg, scaling back to produce figures for earlier years, or whether the employer is assuming liability for the employees’ income tax and any other relevant agreements. By the time that computations are under consideration, the facts surrounding the inaccuracies should have been disclosed so that it should be a case of reviewing the workings for technical considerations only.

Possible areas for amendment are:

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