Company tax returns ― HMRC powers

Produced by Tolley

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

  • Company tax returns ― HMRC powers
  • CTSA enquiries and compliance checks
  • Enquiries
  • Compliance checks
  • HMRC’s powers to obtain information
  • Determinations
  • Discovery assessments
  • Conclusiveness of amounts in the company tax return

Company tax returns ― HMRC powers

CTSA enquiries and compliance checks

HMRC has the authority to investigate the tax affairs of all taxpayers. It can either open a formal enquiry into a specific tax return, or it can make a more general compliance check to verify a tax position, which need not be in relation to a specific tax return.

Enquiries

CTSA enquiries are formal procedures that take place to ensure that companies submit corporation tax returns which are both complete and correct.

An enquiry can start for a number of reasons. The enquiry could be ‘random’ ― generated by HMRC’s computer systems. Alternatively the return could be subject to a ‘selected’ enquiry where HMRC has identified something on the return which it does not agree with, or wishes to ask further questions about.

There could also be ‘routine’ enquiries. This will apply particularly to very large companies, where simply because of the amount of profits and tax involved, the return will be subject to an enquiry virtually every year.

Selected and routine enquiries can be avoided by the company making complete and thorough disclosure on the return of everything HMRC may want to ask about. In particular, full analysis should be given of all contentious expenditure headings, such as legal and professional fees, repairs expenditure and entertaining (split between allowable staff entertaining and other disallowed entertaining). See the Adjustment of profits ― overview guidance note for further details.

If this information is not supplied on the return, HMRC may start an enquiry to find the breakdown of the figures.

HMRC can give notice of an enquiry up to 12 months from the actual filing date for corporation tax returns filed on time. This deadline only applies to single companies and companies which are members of a small group. The deadline for large groups of companies is 12 months from the filing due date.

However, if the return is filed late, HMRC

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