HMRC powers to open an enquiry into a return

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

  • HMRC powers to open an enquiry into a return
  • Introduction
  • Correcting a return
  • Opening an enquiry
  • Individuals and sole traders
  • Partnerships
  • Companies
  • Amendments
  • The single compliance process

Introduction

Before proceeding any further, 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 is specifically about 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.

Correcting a return

An Officer can, within nine months of receiving a self assessment tax return or 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
  • 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 more information is needed

There is no right of appeal against a correction but there is a right of rejection.

The taxpayer can reject a correction of a self assessment return by notice, in writing, within 30 days. This means that the correction has no effect and the self assessment is put back to the original figures. Even if the taxpayer does not reject the correction in

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