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HMRC visiting rules adjusted

HM Revenue & Customs will have the right of entry into any premises or part of a premise where the taxpayer either conducts his or her trade or retains records of his or her trade from April 1.

It will be usual for the taxpayer to be informed prior to the visit; however HMRC can make unannounced visits if they feel it is reasonably necessary and justified. Its reason for justifying the visit may not seem reasonable to the taxpayer.

HMRC have given some reasons for making an unannounced visit, these include, because the taxpayer was not present when the inspector called previously or that they could not contact the taxpayer.

It’s not currently clear how many times the HMRC will try to contact and arrange a visit before turning up unannounced.

Jeff Millington at tax specialists BTG Tax, said: “What is clear is that HMRC seem to be giving themselves enough room to justify an unannounced visit, without too much effort.”

Millington has 24 years of experience working in HM Revenue & Customs dealing with investigations across all direct taxes, culminating in conducting investigations into companies and individuals where serious fraud had been alleged and undertaking complex technical enquiries within special civil investigations.

Do you have to let an inspector in just because he asks to?

• Ascertain who has authorised the unannounced visit and ask for the reason the visit has been made. You will be given a formal notice explaining the rights of the inspector and your rights.

• Do not be put off if the inspector refers to the fact that you may incur a financial penalty for refusing them entry. This can only happen if the visit has been authorised by an independent tribunal. Even on these occasions if your actions for refusing entry are reasonable then a penalty is unlikely.

• If it is inconvenient to the business you can justify arranging another time. That way you can ask for professional advice and ensure you know what records the inspector wants to see and how to make the records and information available for the inspector to review.

• You have the right to contact your professional advisor and arrange for him to be present before letting the inspector onto the premises. This is important as the inspector will invariably want to talk to you about the business and will probably also look to use this opportunity to discuss your private expenditure requirements.

• It is important that you do not make comments off the cuff that rely on your memory, which lets face it can be inaccurate when facing a stressful situation. However, inaccurate replies given to the best of your belief and knowledge can be used against you in the future.

• Be aware that the inspector can ask to inspect all business assets on any premises. This potentially allows the inspector access to every part of your business. This does not have to be a bad thing, if you want to convince him or her concerning a particular claim for a deduction, viewing the asset in question may help.

• There is no reason why a record review can not take place at your accountant’s premises if you have a good commercial reason for requesting this.

• Any request by the inspector to come onto your premises needs to be considered calmly and you have to decide if the request is reasonable and justified. Remember the inspector has to give a reason. If you are in any doubt or feel the inspector is behaving too assertively then pick up the phone and call your legal adviser.

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