Investigations under Paragraph 24 Finance Act 1998 – limited companies

Background

Within specific time limits, HMRC is entitled to enquire into any corporation tax self assessment return. It applies to the original tax return and any subsequent amendment to that tax return.

Under self assessment, HMRC does not have to notify the taxpayer (the company) that the tax return has been accepted and that no enquiries will be made. However, HMRC does have to 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 any errors or omissions are identified, the taxpayer is advised to notify HMRC of what have been found rather than wait for HMRC to do so. This approach can reduce the level of penalties that may otherwise be imposed.

Which taxes can be due?

Unlike individuals that are taxpayers and can pay different taxes such as income tax and inheritance tax, companies only pay corporation tax on any their income or gains.

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

If you would like to discuss this matter further, please contact me at paul@pmc.tax or on 07979 313 010.

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