Owner-Managed Businesses

Opening letter to a compliance check

Produced by Tolley in association with Emma Broadbent of Grant Thornton
  • 19 Oct 2021 08:20

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Emma Broadbent of Grant Thornton provides comprehensive and up to date tax information covering:

  • Opening letter to a compliance check
  • The format of the opening letter
  • Tax adviser’s notification
  • Why am I checking the return?
  • Factsheets
  • Commentary
  • Nature of information requested
  • Formal information request
  • Appealing against the information request
  • Failure to comply with the information request

Opening letter to a compliance check

The format of the opening letter

When HMRC issues a notice that it is checking a return, the opening letter will invariably request information and documents. The opening letter under TMA 1970, ss 9A, 12AC (for individuals and trustees, and partnerships respectively) or FA 1998, Sch 18, Part IV, para 24 (for companies) is sent to the taxpayer or the director of the company, with a copy to the agent if the taxpayer or the company is represented. These letters will often be different in tone and content.

The opening letter to the agent will usually encourage an early phone call to discuss the check and enclose an information sheet asking about computer-based records. The opening letter to the taxpayer will not mention any of this but will explain what happens when the check has been completed. The format of the letter to the agent is typically a notification of the check followed by details of why the check is being made (see below ― note that these are both in relation to an income tax self assessment tax return).

Please click here for a typical letter which might be sent to a taxpayer to open a check into a self assessment tax return:

Please click here for a typical letter which might be sent to an agent to open a check into a client’s self assessment tax return:

Tax adviser’s notification

The opening section of the letter will advise which return period the check applies to and the statutory basis for the check, unless it is an informal check.

It is important for the adviser to make sure that the statutory basis used and the return period that HMRC is checking is valid and that it is within the appropriate time limits. A brief discussion of the normal time limits and legislative framework for checking returns are included in the Types of checks on returns guidance note, and the HMRC’s powers to open an enquiry

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