Businesses warned over new HMRC inspection powers
Businesses have been warned that the effects of HMRC's new inspection power could be down to how they are interpreted by inspectors.
Small businesses, sole traders and limited companies could be among those to heed experts' warnings about new powers being held by HM Revenue & Customs (HMRC).
CCH, a leading provider of information, software and services for accountants, tax practitioners and financial professionals, has urged its clients to beware of HMRC inspectors abusing their powers.
According to the firm, a number of inspectors continue to demand private bank statements and records at the beginning of their enquiries.
However, CCH has moved to remind organisations that this practice is only meant to be used in cases where business records have been deemed "unreliable".
CCH said inspectors make the requests "purely because clients will often supply such documents without question".
In theory, the firm said that the new powers bequeathed to HMRC could be seen as a "step forward" in the quest for increased efficiency in the inspection process.
However, it argued that this will largely be down to how the rules are interpreted by individual inspectors.
If misconstrued, CCH warned that the powers could lead to an "unwarranted intrusion" into the lives of business operators.
"Clients may well be unsure of their rights under the legislation and unaware of what the inspector may or may not legitimately demand," the firm added.
"It is therefore vital that clients understand that they should contact their professional advisers whenever HMRC contact them, in order to ensure that such inspections are carried out properly within the law and that their rights are not violated."
Under the new powers, inspectors also have the right to look around business premises after providing the proprietor with seven days' notice or a shorter agreeable amount of time.
These visits allow HMRC to look at any records on the premises in relation to stocks and assets.
CCH warned that these inspections can take place in the absence of any staff members.
"It does not allow them to search premises, nor does it allow access to areas that are used exclusively as the client's private residence," the organisation explained.
"However, simply by placing a written notice of the inspection in a prominent place, inspectors can inspect the premises when no one else is present, provided that they can obtain access without breaking in."
Investigations can often mean added accountancy expenses for businesses, which could lead a number of organisations to seek out policies to cover them in case of an unexpected inspection.
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