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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Information & Inspection Powers: Conditions and safeguards: How the powers will be used

Information and inspection powers cannot be used unless it is reasonable and proportionate to do so. They must be used reasonably, see CH21300, and only for the purpose of checking someone’s tax position.

Although most checks will be based on identified risks, some tax positions will be checked at random. Such random checks are selected at a national level.

There are three main reasons for making random checks.

  1. Random checks act as a deterrent through creating a presence in all parts of the population - not just those we perceive as `higher risk’. Everyone should be aware that there is a chance that their tax position will be checked.
  2. Random checks allow us to obtain a better understanding of the nature and extent of detectable non-compliance within different segments of the tax paying population. This also helps us to refine our strategy and methods of identifying risks.
  3. Random checks allow us to tell the person of any unclaimed allowances, exemptions and reliefs that may be available to them. We can also gauge the take-up of such measures in circumstances where we might normally not interact with the person.

When you are checking a person’s tax position, you must issue the relevant general information factsheet CC/FS1 (a, b, c, or d) when you start a compliance check.

Note that if your compliance check is into an excise duty, you will use powers under CEMA79. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)