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Revenue offers guidance on new inspection rules

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As from 1 April 2009, new legislation will affect the way that HM Revenue & Customs (HMRC) conducts enquiries, visits and inspections.

The changes in the law involve checks on income tax, capital gains tax, VAT, PAYE, corporation tax and the construction industry scheme.

Under the terms of the Finance Act 2008, the new laws will give HMRC the right to visit businesses in order to inspect premises, assets and records, and to ask taxpayers and third parties for more information and documents.

To help taxpayers understand the new rules, HMRC has put together an e-learning package.

HMRC said that the package provides an overview of the new enquiries and inspection framework, and explains the changes in how HMRC officers check the tax position of individuals, companies and VAT-registered bodies.

The guidance can be found at

Effectively, the new legislation means that HMRC will have: one set of powers to inspect business records, assets and premises; the ability to see statutory business records without a right of appeal; the ability to look at records for PAYE, income tax, the construction industry scheme, capital gains tax and corporation tax during the tax year before a return has been submitted; a new power to correct obvious errors in a tax return based on information held by HMRC; and a single approach across all taxes for asking taxpayers and third parties for supplementary information.

As part of the changes, there will be a new four-year time limit for assessments and claims, a reduction from six years for income tax, capital gains tax and corporation tax and an increase from three years for VAT; reductions in extended assessment time limits; a streamlined process for closing corporation tax assessments; a new statutory ban on inspecting purely private dwellings without consent; a statutory requirement for HMRC to give at least seven days prior notice of a visit, unless either an unannounced visit is necessary, or a shorter period is agreed; a new requirement that unannounced visits must be approved beforehand by a specially trained HMRC officer; and a statutory requirement on HMRC to act reasonably.