SME businesses in Reading/Southampton targeted by HMRC in tax inspection trial 
Small and medium sized businesses in Reading/Southampton are being targeted by HMRC as part of a new tax inspection trial. The trial begins on 1 June and will run for six months before being rolled our across the country.
The tax inspection trial, called a single compliance process, will combine VAT, Income Tax, Corporation Tax and PAYE inspections into one visit by HMRC. HMRC hopes that the single compliance process will help spot evaders and deal with them in a quicker and more cost effective fashion.
Sharon Bedford, a Partner in the Tax team at Thames Valley accountants and business advisers James Cowper offers a note of caution: “Many businesses will be familiar with a VAT inspection, where HMRC simply check VAT invoices and receipts against VAT returns. This single compliance process is likely to be a very different and more intrusive affair. It will be very easy for business owners to trip up without the right advice and support.”
A single compliance process is already becoming commonplace with larger organisations and can be extremely disruptive, as Sharon explains: “The business is typically visited by three inspectors, rather than just one, who will want to examine all tax affairs. Business owners can expect to face in-depth and sometimes difficult questions.
Sharon offers this advice to businesses approached by HMRC under the single compliance process trial:
- Do not panic. If your business tax affairs are all in order you will have nothing to worry about.
- Do not treat the inspection lightly – it will be very different to any previous inspections most business owners are likely to have encountered
- Do prepare for the inspection. Your accountant should be able to help you prepare for any such investigation by asking HMRC exactly what they wish to see and what questions they are likely to ask.
- Ensure your accountant or tax adviser is on hand on the day of the inspection, preferably joining you in any meeting with HMRC.
- Prepare for any potential follow-up visits.
- Whilst a meeting with HMRC might be a good idea, HMRC cannot insist on meeting the tax payer, although it can insist on inspecting the premises.
The HMRC single compliance process is being trialled in Reading/Southampton, Newcastle, Warrington, York, Exeter, London Euston, Cardiff, Belfast, Edinburgh and Dundee. The trial begins on 1 June and will run for six months.
Sharon Bedford, partner, James Cowper LLP +44(0)1865 200500 or email sbedford@jamescowper.co.uk
25.05.11