Nicolson, Chartered Accountants

49/50 Bayhead, Stornoway, Isle of Lewis HS1 2DZ

Inland Revenue enquiries

We have vast experience of dealing - successfully - with tax investigations.  We regularly deal with general and specific enquiries from the covering all aspects of tax.

To the taxpayer, they often seem frightening, and out of control.  We can control that process for you.  If we cannot help you to protect and plan your tax affairs, then we can help you deal with a tax investigation. 

Revenue enquiries into self assessment tax returns

The Revenue have the absolute right, without giving reason, to enquire into returns within a year after their statutory filing date, i.e. normally until 31 January 2006 for the year ended 5 April 2004.

They may select cases at random, and do not have to say whether their enquiry is random or whether they suspect something is wrong.

They can make a "full enquiry", to check the return as a whole, or an "aspect enquiry", concentrating on one or more specific items, but possibly extended if the initial enquiry casts doubt on the whole return's accuracy.

These procedures cause some concern, not least because the notices issued to notify the start of an enquiry are often badly worded and can frighten unnecessarily. You may hear from the Revenue before us, so if you receive a "notice of enquiry", contact us immediately.

The number of investigations

Following a question in the House of Commons, it was confirmed that around 2,850 random enquires into the affairs of small business and individuals happen each year.  In 1998/99 only 30% of these resulted in an adjustment to the Tax Return, meaning 70% of Returns randomly selected were correct!

However, the taxpayer still had to pay the full cost in every single case, which is why we offer tax investigation insurance.

Working papers

Do the Inland Revenue have the right to see the accountants working papers?  No, not any longer.  Guest House Proprietor v Kendall (HMIT) confirmed these belong to the accountants, and we now refuse to hand these over.

The Inland Revenue could demand access via S.20(3) TMA 1970, but we consider that this would only be used in serious cases.

Do I have to meet the Inspector?

No.  Not until the matter is to be concluded, at which point you may need to be present to reach a final agreement.  We will no longer allow a "fishing expedition" to be launched by an initial meeting between the Inspector and the taxpayer.