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HMRC internal manual

Compliance Handbook

How to do a compliance check: types of compliance check: pre-return checks: correcting inaccuracies

If you find that tax is at risk in the pre-return period you will need to consider what should be done to put the person right and whether periods for which a return has been filed are affected.

This consideration will not present any difficulties for officers carrying out VAT, environmental taxes or Employer Compliance checks, but there are some practical issues if IT/CTSA pre-return checks show up inaccuracies.

If, in an IT/CTSA check, you have reason to suspect, see CH23560, that the person

  • may have been under-assessed to or may have under-paid tax or
  • may have claimed or been given excessive tax relief

then you may

  • open an enquiry into a return where the enquiry window is still open or
  • make an assessment for the chargeable period (within the time limits allowed) where the enquiry window is closed.

If you are able to assess a chargeable period then you will be able to use the powers provided by Schedule 36 of FA 2008 to obtain the information you need to quantify the tax underpaid.

You will always need to advise the person how inaccuracies should be put right and the action they should take to pay the right amount of tax for the period covered by your pre-return check. You should liaise with other parts of HMRC to report the extent of the inaccuracies. If the person is in receipt of tax credits you should contact a Tax Credits Consultant, see EM2110.

You should always be aware that a pre-return check may show that the inaccuracies a person has made are in their favour. Where there is an open enquiry window there is also scope for the person to amend that return. The person may also need to make overpayment relief claims for earlier years if those years are in time for such claims.

Where inaccuracies in the person’s favour are found during a VAT or environmental taxes check, you should assist them in correcting the error on their next tax return or by making the necessary assessment.