How to do a compliance check: types of compliance check: pre-return checks: tax planning and avoidance
The powers available under Schedule 36 of FA 2008 enable you to carry out real-time checks into tax planning or avoidance schemes as they are being developed or implemented, rather than having to wait until a return has been made. You must have evidence to support the need to carry out such a check and the information or documents you ask for must be reasonably required by you for the purpose of checking a person’s tax position, see CH21620.
Until a return is filed you cannot pre-judge how a person will deal with a transaction.
Sources of information to identify potential tax planning or avoidance schemes that can be followed up using real-time checks include
- interim company and group reports
- end of year company and group reports
- clearance requests
- information obtained about current transactions including, for example, through a pre-transaction ruling on a point of law and
- information identified during a check, for example, from management reports or step plans.
The use of formal powers under Schedule 36, to obtain information necessary to establish the tax position, will only be needed where it has not been provided following an informal request.
There are certain restrictions on the information that can be requested, for example, in relation to legally privileged information or documents, see CH22000.