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HMRC internal manual

Compliance Handbook

How to do a compliance check: explaining your findings and seeking agreement

You should always try to obtain the person’s agreement to your findings as you gather evidence and establish facts during the course of your compliance check. This approach will help avoid a dispute at the end of your check.

Your findings should not come as a shock to the person at the end of the compliance check. In accordance with HMRC’s policy of openness and early dialogue you should have

  • explained what tax risks you were looking into and
  • agreed the information and documents needed to check the person’s tax position.

In the simplest of cases there may be minor inaccuracies that can be agreed easily. In other cases the evidence of income and expenditure may be open to different interpretations and you may have to use certain techniques to arrive at your findings, such as a mark-up exercise. The person may not agree with your findings and you may have to discuss these with the objective of reaching agreement about what the correct figures should be.

If you discuss whether or not a penalty is payable before your decision has been authorised, you must explain that your decisions have to be authorised and may be changed.

Until your decision has been authorised you must not tell a person that

  • no penalty is payable
  • you will be charging them a penalty for being careless, if there is a chance that the authorising officer may think it could be deliberate.

It is important that you present and explain your findings in a way that the person understands. Give them the opportunity to ask you any questions they may have and allow them sufficient time to seek advice if they need to. Where the person asks for a clearer or more detailed explanation, wherever possible you should give this to them promptly. This approach will

  • bring out issues that need resolving at the earliest time possible
  • avoid misunderstandings that lead to delay and possibly costs to the person
  • avoid reviews and appeals.

In straightforward cases it may be possible to explain your findings over the telephone but for all other cases this will be impractical and you should present your findings to the person, or their authorised agent, in writing.

Where there are any facts or issues that are preventing the person agreeing with your findings follow the guidance at CH280000.