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:
This guidance note and the following notes in this section mostly use the term ‘compliance check’ or ‘check the return’ in line with HMRC’s current terminology. However, the term ‘enquiry’ is still used in some HMRC guidance and in the referenced legislation from TMA 1970 and FA 1998.
HMRC can make a formal check, or an informal check on a return, and it is important to distinguish the type of check being made.
Where the enquiry window is still open (see below), HMRC will primarily check a return using the legislation at TMA 1970, ss 9A, 12AC (for individuals and trustees and partnerships respectively) and FA 1998, Sch 18, Part IV, para 24 (for companies). This is a formal check.
However, HMRC may also request information on an informal basis, through FA 2008, Sch 36. This framework applies to income tax, corporation tax, capital gains tax and VAT, and provides HMRC with additional powers to obtain information and to inspect businesses.
HMRC will commonly use the powers provided by FA 2008, Sch 36 in the following circumstances:
when HMRC has made an informal request for information and / or documents during a check and the request has not been complied with so that a formal notice is required, or
the enquiry window has closed and HMRC believes there has been a loss of tax
The introduction of FA 2008, Sch 36 also marked the change in the approach and language used by HMRC from one of ‘opening enquiries’ to ‘checking returns’. See the archived HMRC FAQs in respect of compliance checks.
For an interesting article about HMRC’s increasingly frequent practice of opening informal investigations outside of the enquiry window, see ‘JJ Management Consulting: HMRC’s right to conduct informal investigations’ by Kate Ison and Jessica Hocking in Tax Journal, Issue 1497, 16 (24 July 2020).
The enquiry window for income tax self assessment remains open for 12 months from the date of filing, assuming
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
The substantial shareholding exemption (SSE) provides a complete exemption from the liability to corporation tax on the gains generated from qualifying disposals of shares and interests in shares by qualifying companies. Conversely, if losses are generated by the disposal and the SSE conditions are
‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
This note offers guidance in respect of the administration of company tax returns. If a company or organisation is subject to corporation tax they will have to complete and file a company tax return for each accounting period. A company or organisation must, in the main, file a return even if they
Terminal loss relief for trade losses in the final 12 monthsTrading losses incurred by a company in the final 12 months leading up to the discontinuance of trade may be carried back for up to three years from the period beginning immediately before that 12-month period. So if the final accounting
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.