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HMRC’s Tax Investigation and Enquiries: Your Rights and Responsibilities

Published by UK Property Accountants
Published Date: September 27, 2023

In the world of taxation, it's essential to know your rights and responsibilities when it comes to sharing information with HMRC. 

While HMRC has the authority to request information, it is crucial to understand the boundaries within which these requests must fall.

What HMRC Cannot Ask for?

01

Reasonable Requests

HMRC can only ask for information that they genuinely need to assess your tax position. Finance Act 2021 introduced provisions allowing them to request information for tax debt collection purposes, but even these requests must be reasonable. This means they should be relevant to your tax situation and not overly burdensome.

02

Off-Limits Information

There are specific categories of information that HMRC cannot ask you to provide. These include documents you don't have access to, details related to ongoing tax appeals, personal records (health, spiritual, or personal welfare), and journalistic materials for professional journalists.

Additionally, documents older than six years or information about deceased individuals after four years are generally not subject to HMRC's request. Confidential communications between you and your legal advisor are also protected.

03

Exceptions for Tax Returns

Generally, HMRC cannot ask for information already covered in your tax return. However, they may do so if there's an open formal enquiry into the return or if they suspect underpaid tax or excessive tax relief claims. Businesses may also have to provide information for VAT or PAYE purposes when reasonably needed.

If you want to know more about HMRC investigations visit our article β€œHMRC Nudge Letters and Investigations : Managing Tax Enquiry".

Things you should consider

The following points need to consider while sending information:

HMRC’s Tax Investigation and Enquiries

Protection of Personal Information

If a requested document contains personal information, you can provide it while blocking out the relevant private passages.

When to send original documents

In most cases, you can provide copies of requested documents, unless specifically asked for the original. However, if HMRC requires the original document, they must make a written request for it.

Your Right to Appeal

You have the right to appeal to the tribunal against any notice to produce information or against specific requirements outlined in the notice. This appeal must be made in writing within 30 days of receiving the information notice. Additionally, you can request an independent internal review by HMRC.

No Right of Appeal in Certain Cases

In some instances, you may not have the right to appeal, such as when asked to produce statutory records, or if the notice has already been approved by the tribunal. However, if the notice is approved, you have the right to verify specific aspects of the process.

Knowing your rights and responsibilities when dealing with HMRC's information requests is essential for navigating the taxation landscape smoothly. Stay informed, be aware of the boundaries, and protect your interests while fulfilling your obligations.

To know more about this read our article on  β€œHMRC Tax Investigation – 10 Reasons HMRC Might Audit Your Tax Return”.

Conclusion 

In summary, understanding your rights and responsibilities when dealing with HMRC's tax investigations and inquiries is crucial. HMRC can request information, but they must do so within certain boundaries, ensuring that their requests are reasonable and relevant to your tax situation. 

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