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HMRC internal manual

Compliance Handbook

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

A check includes carrying out an investigation or enquiry of any kind.

Types of checks can range from a short telephone call to confirm a simple fact to a full and detailed investigation of a person’s entire financial affairs over a period of years.

If all the normal and extended time limits have expired so that neither the person nor HMRC can change a particular tax position, see CH21540, it will not be reasonable to carry out a check of that particular tax position.

Where extended time limits may still apply for careless or deliberate behaviour, you must have some reason to suspect that such behaviour has occurred before you can check the tax position. For guidance about behaviour and extended time limits, see CH50000+.

Where there is suspicion of careless or deliberate behaviour then the use of information powers can help you to establish this. If you subsequently consider that the behaviour has been careless or deliberate, then you will be able to make extended time limit assessments where there is an insufficiency of tax for the relevant periods.

HMRC must use its resources to best effect in meeting its responsibility to collect the right amount of tax from the right people at the right time. Compliance checks should be made in a timely and proportionate way to ensure that a person’s tax position is correct.

Where a check identifies an error or shortcoming it is important to help the person identify improvements that can be made. This will hopefully reduce the risk of errors in future returns and reduce the need for further checks to be made on that person’s tax position.

However, where we have checked a person’s tax position it may still be reasonable to carry out a further check at a later date. For example, we may identify another risk (including another risk in an area previously checked) if we later obtain information that conflicts with the information that was available during the previous 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)