HMRC is entitled to make enquiries into personal tax returns. These enquiries will either relate to a specific entry(ies) of the self assessment return (an aspect enquiry) or the tax return as a whole (a full enquiry). It applies to the original tax return and any subsequent amendment to that tax return.
In law, HMRC does have to notify the taxpayer in writing that HMRC intends to enquire into the tax return. However, bear in mind that strict time limits apply.
What action should be taken?
When a taxpayer receives notification of an enquiry it is advisable that the tax return concerned is revisited and reviewed again. If you find any errors or omissions, seek advice and think about notifying HMRC what you have found. This approach can reduce the level of penalties that may otherwise be imposed.
A lot of taxpayers wait for HMRC to contact them. I suggest it is often better to take ownership of a problem rather than assume the ostrich position.
Which taxes can be due?
Enquiries into personal tax returns cover all personal taxes including income tax, capital gains tax and inheritance tax. Additionally, National Insurance can become due in certain circumstances although National Insurance is not strictly a tax.
Where a business is concerned, you may also need to consider the interaction of different taxes. For example, the payment of PAYE and NIC should result in an equal and comparable deduction against profits for corporation tax purposes. This may not always be the case, for example if the company has made a loss.
Will there be any other liabilities?
Yes there can be interest on any late payment of tax and potentially a penalty.
Help is at hand
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