| HMRC inspection powers relaxed |
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| Written by Adrie van der Luijt | |
| Tuesday, 24 June 2008 | |
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There has been a rethink on HM Revenue & Customs inspection powers being introduced in the Finance Bill 2008.
Increased powers of inspection were announced in the 2008 Budget and were meant to provide HMRC with the authority to enter and search business premises with potentially as little as 24 hours notice. These powers have been debated and amended in the Finance Bill to reflect a more 'relaxed' approach to HMRC inspections, however, which will be subject to limits and conditions and introduce at least seven days notice. Welcome improvements Francesca Lagerberg, head of the national tax office at Grant Thornton, is pleased with these amendments. She says that there are some welcome improvements here to safeguard taxpayers' rights that the original draft had neglected. “It is essential that any new power for HMRC has a matching safeguard and is only used in limited and appropriate circumstances. No one wants to see any possibility of 'fishing expeditions' into taxpayers' affairs," she adds. Lagerberg also notes that extending the notice time to seven days will enable businesses to be better prepared for visits which can be very stressful. In particular, small to medium sized businesses will benefit greatly as many lack the resources to comply promptly to an HMRC inspection. The new rules allow for a shorter notice period - or no notice at all - to apply, however, where this is agreed with the occupier or it is approved by an authorised officer of HMRC. This is unchanged from the original draft legislation. Only tax premises In the original draft, the rules would have allowed tax inspectors to enter and inspect any business premises to enable any person's tax position to be checked, such as third parties. This has now been amended to only the premises used by the person whose liability is being checked, with the exception of premises used in connection with the taxable supply of goods, in order to help HMRC combat certain VAT frauds. In addition, the inspection powers are limited so that tax inspectors may not enter or inspect any part of the premises that is used solely as a dwelling, so the taxman can not come into someone's home. Lagerberg says that the finalised powers are still fairly stringent in areas, but is pleased that the Treasury saw sense in the more significant points being made by interested parties when amending HMRC's powers and that there is guidance and a Code of Practice to ensure HMRC uses its powers proportionately. "These amendments are the result of positive dialogue between the Treasury and business, and show the willingness of both parties to engage on major issues to reach a reasonably beneficial conclusion. Hopefully, this consultative approach will continue," Lagerberg concluded. Related articles
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