HMRC Compliance Checks for Small Business

Small Businesses and their accountants have been warned to ensure they are in compliance with the upcoming changes to HM Revenue and Customs' (HMRC) tax checks framework. As of April 1st 2009, the department has one all-encompassing tool kit of safeguards and powers which includes VAT, income taxation, PAYE, corporation tax, capital gains taxation and the Construction Industry Scheme. Importantly for accountants, the government's taxation arm will be handed a new set of inspection rights, meaning it is essential that records are kept and deadlines for tax returns are met. Among its new powers, HMRC will also be able to check a taxpayers premises and assets and inspect statutory business records with no right of appeal.

For all visits, HMRC will be required to give at most a week's notice unless it deems a surprise inspection to be required.

Another major alteration to compliance checks which agents should keep in mind is that the government has now cut the six-year time limit imposed on claims on assessments for income taxation, corporation tax and capital gains taxation down to four-years.

In cases of VAT claims, this has now been increased by a year to four years.

A spokesman for HMRC, Dave Hartnett, reassured agents that the changes should not provide too much unnecessary difficulty.

He commented: "This new approach to compliance checks will improve HMRC's ability to ensure that the right tax is paid at the right time."

"We have consulted with taxpayers and their accountants to make sure that HMRC achieves the right balance between obtaining the information and appropriate use of our powers."

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