A podcast by HM Revenue and Customs introducing the new compliance checks regime for taxes like PAYE income tax, and eventually national insurance, has gone live.
The eight-minute download is aimed at advisors and small businesses wondering how HMRC’s regime of checks, safeguards, penalties and powers will change from April 1st.
It outlines the new time limit for tax assessments and cites record-keeping requirements, which will be universal, as will new rules for HMRC’s inspectors.
However, the Revenue’s Simon Norries said the record-keeping framework will emphasis retaining records that allow an accurate return per individual business.
The podcast illustrates his pledge that HMRC will “do a lot more” so individuals and businesses understand their rights and obligations when it makes compliance checks.
It will be complemented at the end of March, when the Revenue will openly publish the guidance its staff will be issued on how to apply the new practices and powers.
In its current internet message, HMRC dismissed reports that its officials can automatically enter a private residence, unless they are invited or have a warrant.
Where a private home is used for business, HMRC said it can inspect the home’s business aspects “if it’s reasonable to do so,” like checking stock to work out tax due.
Norries said that if all a company owner does is write up their records at home, “then that’s not reason enough” to enter the home. Instead, the records would be sent to HMRC.
The changes were described in the podcast as amounting to more than just a tidy-up left over from the merger of Customs and Excise, before which powers were ring-fenced per tax.
Norries said the reforms give more support to people who take care to pay the right amount of tax, while “coming down harder” on those who don’t in order to gain an advantage.
The Revenue added it planned to look at exploring the extent to which one set of compliance checks could be extended across all the duties and taxes it addresses.
One set of rules for checks the proper tax has been paid seems sensible, Norries said, adding that HMRC would still want to consider each tax and circumstance carefully.
Last week, an HMRC spokesman signalled that the criteria it uses to determine which taxpayers are investigated under IR35 would not be affected by the changes.
”Any individual who provides his/her services through a service company to an end client potentially falls within IR35,” the spokesman told FreelanceUK.
“HMRC seeks to narrow those cases subject to investigation by considering a range of factors, including, but not exclusively, sectors, engagement patterns and the nature of the service company.”
The tax department’s podcast, available on HMRC’s website, mentions the new tax limit for assessments, which includes introducing a three-year limit on VAT claims.
As a result, businesses should now revisit VAT returns between 1973 and 1997 and claim for any VAT they are owed by March 31 2009 before the window closes for good.
The cap on these old VAT claims takes effect from April 1 2009, shutting off any opportunity for businesses to recover VAT from the 24-year period which they are currently entitled to.
Feb 26, 2009
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