Tax enquiries on hold
Coronavirus and tax. According to a major tax and accounting firm, HMRC is writing to thousands of businesses and individuals telling them that it won’t be pressing for information or documents which it has requested in the course of carrying out a tax investigation. In some cases it has gone a step further and suspended its enquiry. A government official has confirmed that HMRC is “prioritising work to support businesses and individuals” which means if you’re currently involved in a tax enquiry you’ll get a breather. But how should you respond?
Suspension not closure. If HMRC has suspended an enquiry it means that it will not be pursuing it until further notice. However, unless it issues a formal closure notice it will restart the enquiry when the lockdown is over. Where HMRC has said that it won’t press for information it has requested, it will expect a response from you or your accountant in due course.
Time to act. A breather in an HMRC enquiry might seem like good news but our advice, and that of other tax experts, is that you should respond to HMRC’s enquires without undue delay. Indeed, if you have more time on your hands because of the lockdown it’s an opportunity to tackle HMRC correspondence and put the ball back in its court.
Trap. If there is extra tax to pay at the end of an enquiry, HMRC’s interest charges will accrue until the dispute is settled and the tax paid. There’s been no official suggestion that this will be waived or reduced.
Record keeping. The firm which broke the story about HMRC’s new stance on enquiries made a related point which HMRC has reiterated. Employers must keep records and calculations to back up their claims for Coronavirus Job Retention Scheme (CJRS) payments as HMRC has said it may later make enquiries to check these (see The next step ).
For details about CJRS record keeping, visit http://tipsandadvice-tax.co.uk/download (TX 20.15.01).
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