New enquiries scheme extended
When does the SCP apply?
The Single Compliance Process (SCP) is a new approach to how the Taxman carries out tax enquiries on small to medium-sized businesses. A trial of the SCP was launched last year and this has now been extended. It’s likely, therefore, that if you’re in one of the 18 trial areas and the Taxman wants to carry out an enquiry, or compliance check as he now likes to call them, it will be through the SCP (see The next step).
What’s the idea?
The idea of the SCP is for the Taxman to reduce the overall time he spends on each investigation. Currently, this can be hundreds of man hours, but the target for an SCP is to complete it in as little as one and a half days for simple cases and up to eight days for complex ones. This is good news because less time spent by the Taxman should mean less of your accountant’s time will be needed. This translates into less stress and worry for you and hopefully lower accountancy fees.
How will the time savings be achieved?
The Taxman claims that the SCP is a far more open process than old style enquiries. In other words, he’ll be more open from the outset about what he thinks is wrong rather than wasting time dancing around the issues trying to catch you or your accountant out.
- he’ll aim to carry out a review of your records on either your or your accountant’s premises. While nobody likes a visit from the Taxman, this can be the lesser of two evils compared with having to copy and send off a large volume of documents
- he’ll only carry out a sample check of records instead of going through the lot with a fine-toothed comb
- where he’s reviewing a particular aspect of your company’s tax affairs he won’t, as he often currently does, carry out a “fishing expedition” to see what else he can find.
In return, the Taxman expects you to co-operate and provide him with access to the information he needs. Naturally, as you have nothing to hide we can’t see a problem with all this.
Are there any negatives?
Most tax experts agree that the SCP is a good idea but there are some worries. For example, the Chartered Institute of Taxation is concerned that a tax inspector keen to meet SCP targets might try to bully a business into agreeing a settlement quickly and not give it time to properly consider the issues.
Tip 1. While you should always aim to respond quickly to the Taxman’s questions or requests, you’re entitled to a reasonable amount of time to look into and consider contentious issues. It won’t count against you to remind him of this.
Tip 2. One time saving aspect of the SCP is that the Taxman won’t automatically produce notes following meetings etc. for your approval. But you can ask for these and we strongly recommend you do. Our experience shows that they’re often helpful to identify misunderstandings and will give you and your accountant the opportunity to correct them before too much time is wasted.
For a link to HMRC’s briefing paper on SCP, visit http://tax.indicator.co.uk (TX 13.04.05).
Create your profile to unlock this advice and many more.