MTT55110 - Administration: Compliance: Compliance checks: Overview

During compliance checks, the filing member will be responsible for interacting with HMRC on behalf of its group. This simplifies administration and reduces the compliance burden on groups.

This is set out in part 6, schedule 14 to Finance (No.2) Act 2023.

HMRC right to carry out a compliance check

MTT is administered under self-assessment. In general terms, this means that the amount returned by the group in its self-assessment return is taken to be the assessment, and the liability is payable without any action on HMRC’s part.

Once the self-assessment return has been received, legislation gives HMRC the explicit right to enquire into the return and carry out a compliance check. HMRC is under no obligation to give notice that a particular return has been ‘accepted’ or that no compliance checks will be made into that return.

The right to carry out a compliance check extends to anything contained in the self-assessment return, or which is required to be contained in the return. This includes claims and elections, and extends to any amendments to the return. See MTT55140 for guidance on carrying out compliance checks where a return has been amended.

Amendments during the course of an enquiry

During a compliance check, HMRC may make an amendment (a ‘jeopardy amendment’) to the group’s self-assessment if it is believed that:

  • the self-assessment understates the group’s true tax liability, and
  • there is likely to be a loss of tax to the Crown unless the assessment is amended at once.

The self-assessment is amended for all purposes when written notice to that effect is given to the filing member. See MTT55150 for guidance on jeopardy amendments.

Concluding compliance checks

A compliance check is completed when a written notice of completion (a ‘closure notice’) is issued to the filing member. This notice will state the conclusions of the compliance check. The notice will conclude all elements of the compliance check and must include the amended amount of tax due if an amendment is required. 

The closure notice takes effect when it is issued and amends the return to give effect to the conclusions stated in the notice.

The filing member has the right to apply to the Tribunal to request that HMRC be directed to give a closure notice within a specified period. 

See MTT55260 for further information on closure notices.