Compliance: enquiry work: working an enquiry
The Enquiry Manual contains full details about working an enquiry.
The CQI Workbench provides computer support for S9A and S12AC enquiries.
The functions you use on the CQI Workbench, while you are working an enquiry, will depend on the complexity of the case and any standards that may have been agreed locally.
More information is available for each of the following subjects
Amendment to self assessment before enquiries are complete
In the period from opening a S9A enquiry to the preparation of a closure notice and amendment of the return to give effect to its conclusions, the only allowable enquiry amendment is a jeopardy amendment (SAM21010). This is made where, exceptionally, tax is at risk unless an amendment is made immediately. The amendment is made using
- Function AMEND RETURN FOR ENQUIRY. The computer will not issue a revised tax calculation but the update will appear as an enquiry amendment on the next statement. You should take a screen print of the revised tax calculation for including with the amendment notice
- Function CREATE RETURN CHARGE FOR ENQUIRY. A revised tax calculation is not available in this function so you will need to clerically prepare one for issue with amendment notice. The update will appear as an enquiry amendment on the next statement
Note: Where the enquiry record was set up using CQI Workbench function CREATE ITSA DISCOVERY, refer to the Action Guide ‘Working an enquiry: Using ITSA Discovery records’ (SAM31031)
There is no statutory right to make a jeopardy amendment on a partnership.
Instead, a jeopardy amendment may be made to the partner’s self assessment, to reflect the additional tax falling on the partner from the potential amendment to the partnership statement.
The amendment can only be made on an individual who is a partner provided a S9A notice has been issued in respect of his / her return and the other conditions for making a jeopardy assessment are met in respect of that partner.
The amendment can only be made on a company which is a partner, if the accounting period ends on or after 01/07/99 and there is an open enquiry under FA1998, Sch 18, Para 24. You must liaise with the Inspector dealing with the company accounts.
In some cases a jeopardy amendment will therefore be made on one, or some partners, but not on others.
Full information on jeopardy amendments to partners’ returns is available in the Enquiry Manual at EM7075 onwards.
On making a jeopardy amendment you should also use
- Function AMEND TAXPAYER SIGNALS to enter ‘Y’ in the Priority Collection Action field
- Function MAINTAIN SA NOTES to record the reason for setting the signal. For example, ‘Jeopardy amendment 2006-07 - £6000 tax at risk’
If the taxpayer appeals against the jeopardy amendment use
- Function CREATE APPEAL to record the appeal
And, subject to an agreed postponement application
Function MAINTAIN STANDOVERS
- To formally holdover collection of additional liability on the amendment
Note: Always follow the instructions in section ‘Postponements’ in business area ‘Appeals/Post’nts’ (SAM11000 onwards) on dealing with an application
- To informally holdover collection of payments on account for the next year to the extent they are based on the amendment
Example: Additional income tax and Class 4 NIC of £8000 charged in 2006-07 jeopardy amendment. Payments on account for 2007-08 increased automatically by £4000 each. Appeal and postponement request received. Agreement to postpone £4000 so £2000 also informally held over on both payments on account for 2007-08
Note: An appeal against a jeopardy amendment cannot be heard by the Tribunal until the closure notice has been issued.
Record keeping and information powers
Under S12B TMA 1970 a taxpayer is required to keep all such records as may be requisite for the purpose of enabling him to make and deliver a correct and complete return for the year or period. Penalties will be sought in serious cases, where, for example, records have been destroyed deliberately to obstruct an enquiry or where there is a history of serious record keeping failures. In accordance with the Enquiry Manual penalties for record keeping failures are only to be sought after written approval from Authorising Officers within CPTT or Local Compliance.
Under S19A TMA 1970 the taxpayer (or, in the case of a S12AC enquiry, the nominated partner) can be required to produce documents, accounts and particulars that are needed for the purpose of determining if, and to what extent, the return is incomplete or incorrect (or the amendment to the return is incorrect). The requested information must relate to a single year which is under enquiry and you will need to issue separate notices for each enquiry in which you need information (unlike a notice under S20 TMA 1970 which enables information relevant to a person’s tax liability generally to be obtained without reference to a particular year).
The taxpayer (or nominated partner) has the right to appeal against a S19A notice within 30 days from its receipt by the taxpayer.
Unless evidence is provided as to the date of receipt of the notice, you should assume that
- If it is posted second class, it is received 4 working days after you post it
For example, if you post a notice of completion on Friday by second class post, you should assume it is received on the following Thursday (assuming no public holidays in the meantime).
- If it is posted first class, it is received 2 working days after you post it
If the S19A notice is not complied with, you may decide to impose an initial penalty of £50 on the taxpayer (or nominated partner) and, after contacting him / her, daily penalties of up to £30 per day if he / she still fails to provide the information. Alternatively, you may ask the Tribunal to impose daily penalties, (not exceeding £150 per day).
In the above situations you should
- Complete form 394(IT/CT) for issue with a covering letter explaining why the penalty is being imposed and that it is liable to interest if paid late
Note 1: Include a payslip using the Print Payslip application. Enter the UTR, followed by a K (for example, 8257235884K), in the ‘Reference’ field and complete the other fields as necessary
Note 2: On completing form 394(IT/CT) do not give it a PEN reference but instead enter the taxpayer’s
* UTR Or, if the taxpayer’s SA record is linked to a PAYE record * NINO
- Use function CREATE SUNDRY CHARGE to enter the penalty on the taxpayer’s (or, in the case of a partnership, nominated partner’s) SA record. The due date will be 30 days from the date of issue of the notice
- Use function MAINTAIN SA NOTES to record the type of penalty - ‘S97AA Initial Penalty’, ‘S97AA Daily Pens (Ins)’ where the daily penalty was determined by an Inspector or ‘S97AA Daily Pens (Com)’ where the daily penalty was determined by the Tribunal, as appropriate
- Use function CREATE APPEAL to record on the SA record any subsequent appeal
- Use function MAINTAIN STANDOVERS to informally holdover collection on penalties which are under appeal, unless there are good reasons for taking recovery action pending determination of the appeal
Note: Arrange for the appeal to be heard by the Tribunal (or, the High Court / Court of Sessions in Scotland, if the appeal relates to daily penalties imposed by the Tribunal)
Making relevant electronic notes
During the enquiry, if the case owner of the enquiry changes, you should provide up-to-date details in function AMEND TAXPAYER SIGNALS. You should include the new case owner’s name, contact telephone number and location (sufficient to allow post to be directed to the appropriate Enquiry Officer).
You should also use function MAINTAIN SA NOTES to record information that may be relevant to other staff using the SA record. Examples include
- Appeals information and / or hearing by Tribunal
- Any references to SCI or Specialist units
- Complaints made during the course of the enquiry
- Involvement of the Revenue Adjudicator
- Any significant event during the enquiry, which may affect the action taken by others during their day to day work
- Providing a breakdown of tax / NIC. If there is no split make a note confirming if the amendment for the year is all tax or NIC
Any notes must be compliant with the Data Protection Act 1998 (DPA). Do not make an entry which would cause offence or that you would not want the taxpayer to see.
Student Loan Cases
Where the taxpayer is liable to make Student Loan repayments through SA, the entry in the Student Loan Case field in function MAINTAIN RETURN SUMMARY should be ‘Y’. Refer to the section ‘Borrower Compliance’ in the Collection of Student Loans (CSL) Manual which contains detailed information relevant to enquiries in these cases.
Where the Student Loan Case field is ‘N’ but you discover or suspect that the taxpayer is a borrower, you should follow the guidance in section ‘Unmatched Records’ in the CSL Manual.
Under S28A(4) TMA 1970 a taxpayer has the right to apply to Tribunal for a direction requiring an Enquiry Officer to issue a closure notice where he / she considers the Enquiry Officer has no reasonable grounds for continuing the enquiry. On becoming aware of a closure application
- Use function CREATE APPEAL to record the closure application
And, at the earliest available date
- Refer the application for hearing before Tribunal