The principle areas covered by that agreement that have shaped the way pre self-assessment investigations are worked are summarised below:
The initial approach
It was agreed that any initial approach would be to the taxation agent, where an agent has been appointed.
Reason for the investigation
Where selection has been made by the Inland Revenue for detailed examination, the Inspector must give a reason for expressing dissatisfaction. Contrast this with self-assessment enquiries where dissatisfaction is not expressed and no reason is given for an enquiry.
Early stages of an investigation
If dissatisfied, the Inspector will take whatever action is required to either obtain satisfaction that all is in order or else to uncover the facts and make necessary amendments. The Inspector must give, however, the opportunity for that dissatisfaction to be addressed at an early stage; the Inland Revenue agreed not to pre-empt this situation by, for instance, requesting records at an early stage or demanding an interview. Either of these actions could be interpreted as an implication that the Inspector will not be satisfied by the answers given and hence be seen as a denial of the agreed opportunity to address dissatisfaction at an early stage.
The intention was for the agreement to be flexible. Local practices have developed since that time, where, by mutual consent between agents and the Inland Revenue, alternative procedures have been adopted to ensure maximum efficiency and cost effectiveness for all concerned when dealing with investigations. Again this should be contrasted with the much more rigid and universal approach adopted under self-assessment.
Notes of the content of the agreement between the Inland Revenue and the Consultative Committee of Accounting Bodies was issued to accountants as Technical Release 246. Part of those notes are reproduced in the Inland Revenue’s internal manual, the Investigation Handbook, at IH2325.