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HMRC internal manual

Compliance Handbook

Information & Inspection Powers: Conditions and safeguards: What we can require or inspect: Reasonably required

Information or an inspection can only be reasonably required where it could affect a person’s tax position. If having the information or carrying out the inspection could not affect a person’s tax position now or in the future it is not reasonable to require it.

Sometimes it is not possible to know for sure that the information gathered will affect a person’s tax position until you get the information or carry out the inspection.

You may face claims that the information you seek does not affect a person’s tax position. Such claims may be merited, and you should consider them carefully. But the key test is whether the information is reasonably required for the purpose of checking the tax position, not whether as a matter of fact it turns out to affect the tax position.

However, you must be able to show why seeking the information or carrying out the inspection may help you to

  • decide what the correct tax position is, or
  • decide how the person’s tax position can be corrected, if appropriate, or
  • ensure that the correct amount of tax is paid or overpaid tax is repaid.

You can only correct a tax position if you can make an assessment, an amendment or a repayment within the time limits set for making them. You should ensure that you use the appropriate time limits for the particular circumstances.

‘Reasonably required’ means getting the balance right between

  • the burden put on someone to provide the information or face an inspection, and
  • how important the information or inspection is in deciding on the correct tax position.

As well as the Human Rights Act considerations, see CH21300, you should consider when to ask for information, see CH21640.