So-called ‘closed’ tax returns are being questioned again by HM Revenue
& Customs as part of a trial of its new powers, according to reports.
HMRC is conducting informal telephone-based inquiries on closed tax returns,
where it is believed that the department has information from a third-party
about potentially undeclared income and does not offer the safeguards of a
formal investigation, reports the Financial Times.
An ICAEW spokesperson said taxpayers would be within their rights to refuse
to participate in the voluntary trial, but warned lack of cooperation could
influence the tax inspectors’ approach to penalties even though this might not
be legally justified.
Ann Redston, chair of the CIOT’s personal taxes committee, told
Accountancy Age that there was ‘a feeling’ that HMRC was looking to
push through changes to the enquiries procedure ‘very quickly’, and warned that
a proper period of consultation was required.
But she added that they have so far been ‘very consultative’ on the pilot,
and hoped they ‘would continue to do so’, suggesting that proposed changes could
be included in the pre-Budget report later in the year.
An HMRC spokesman said the pilots were designed to ‘find better ways of
helping taxpayers and improve overall accuracy’.
‘If we find a significant error and it is clear that this existed in earlier
years too, then we have to consider the position for the earlier years as well,’
said the spokesman.
‘We already have evidence from the pilot exercises of cases that have been
resolved much more quickly – at a reduced cost to both sides – where the
informal approach has been made.’
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