What are Your Rights and Obligations When You Have Done Something Wrong in Compliance Checks?

What are Your Rights and Obligations When You Have Done Something Wrong in Compliance Checks?

This article carries on from the previous one on How to Deal Effectively with HMRC’s Compliance Checks? and talks about your rights and obligations for compliance checks. 


Can you ask the HMRC to stop the compliance check? 

Your first need to tell HMRC why you think it should stop the compliance check. If the HMRC does not agree, you may be able to ask the independent tribunal that deals with tax matters to decide if it can be stopped. 


What does HMRC usually do if it finds something is wrong? 

HMRC usually does the following: 

  1. Explain why it is wrong while working with you to put it right \
  2. Guide you to prevent it from happening again in the future 
  3. Ask you to sign a certificate to confirm that you have told it all the relevant facts relating to the check 


In case you owe them any money, it will inform you on how to pay. This may also include interest and any penalties it has charged you. However, if the HMRC owes you money, it will normally refund it to you or credit your account. In some cases, it may also pay you some interest. 


What happens if you have deliberately done something wrong?   

HMRC may carry out a criminal investigation with a view to prosecution if you have deliberately done something wrong such as: 

  1. Giving it information that you know is not true, whether verbally or in a document  
  2. Dishonestly representing how much tax you owe, or claiming payments you are not entitled to 


How does HMRC manage serious defaulters? 

HMRC may monitor your tax affairs more closely if you intentionally get your tax affairs wrong and they find this out during the check. 

It also has an enhanced monitoring programme called ‘managing serious defaulters’.

For more information, you can go to https://www.gov.uk/ and search for ‘CC/FS14’. 


When does HMRC publish details of deliberate defaulters? 

HMRC may publish your details if you deliberately get your tax affairs wrong, but it will not do this if it has given you the maximum penalty reduction. 

 For more information, you can go to https://www.gov.uk/ and search for ‘CC/FS13’. 


What happens at the end of the compliance check? 

HMRC may send you one or more ‘decision notices’ or agree a contract settlement with you. 

This decision notice can be: 

  1. A penalty notice if a penalty is due  
  2. An assessment, or amendment to an assessment  
  3. A letter explaining the final position  


What is a contract settlement? 

A contract settlement is legally binding agreement, where you offer to pay everything that you owe as a result of the check, and HMRC agrees not to use its formal powers to recover that amount.

It may be relevant to mention here that you can only pay through a contract settlement if both parties (HMRC and you) agree to this, and to the terms of the contract.  

However, you cannot use contract settlements for any VAT or VAT penalties. 


What can you do if you have any disagreements with HMRC’s decision? 

If HMRC takes any decision you do not agree with, HMRC will write to you about the decision and tell you what to do. You will usually have three options. Within 30 days, you can: 

  1. Have you case reviewed by an HMRC officer who has not been involved in the matter  
  2. Send new information to the officer dealing with the check and ask them to take it into account  
  3. Arrange for an independent tribunal to hear about appeal and decide the matter 

Whichever you choose, you may also be able to ask for an HMRC specialist officer to act as a neutral facilitator to help resolve the dispute. This is called Alternate Dispute Resolution (ADR). 

ADR is only available for disputes that relate to particular tax areas. The officer dealing with the check will tell you if ADR is available for your dispute. 

For more information, you can go to https://www.gov.uk/ and search for ‘HMRC1’ or ‘CC/FS21’. 


What are your principal rights and obligations? 

Your principal rights include: 

  1. The right to be represented and you can authorize anyone to act on our behalf 
  2. The obligation to take reasonable care to get things right  

Even if you have a adviser, you must take reasonable care to ensure that any returns, documents or details they send HMRC on your behalf are correct. 

For more information, you can go to https://www.gov.uk/government/publications/your-charter 


Do you have any rights if HMRC is considering penalties? 

HMRC will let you know if there is something wrong and it is considering penalties.

To find out what rights you have when it is considering penalties, you can go to https://www.gov.uk/ and search for ‘CC/FS9’. 


How can you authorize a representative on your behalf? 

You can ask the HMRC to deal directly with your representative on your behalf during the check. It will only give them details of the check if it relates to taxes that you have authorized HMRC to contact them about. 

You can authorize a: 

  1. Professional tax adviser: by asking them to give you an authorization form to complete and sending it to HMRC 
  2. Friend or a relative: by writing to HMRC and informing the person you wish to authorize and what you want them to deal with on your behalf  


Which compliance checks does this factsheet relate to?  

This factsheet relates to the following compliance checks: 

Aggregates Levy, Insurance Premium Tax, Annual Tax on Enveloped Dwellings, Landfill Tax, Apprenticeship Levy, National Insurance contributions classes 1,1A and 4, Bank Payroll Tax, Pay As You Earn (PAYE), Capital Gains Tax, Petroleum Revenue Tax, Climate Change Levy, Soft Drinks Industry Levy, Construction Industry Scheme, Stamp Duty Land Tax, Corporation Tax, Stamp Duty Reserve Tax, Income Tax, VAT and Inheritance Tax. 


What should you do if your benefits, fees, grants, or tax credits change?    

If you get any benefits, fees or grants based on your income, and your income changes because of this check, you need to tell the organization that is paying for you.  

If you receive tax credits, you must tell the Tax Credit Office about income changes. You can phone them on 0345 300 3900 or write to them at: 

Tax Credit Office  

HM Revenue and Customs  

BX9 1LR 

United Kingdom 

You do not need to include a street name or PO Box. 

Please write ‘Change of circumstances’ at the top of your letter. 


What can you do if you are not happy with the services of HMRC?  

You can inform the person or office you have been dealing with if you are not happy with its service and they will let you know how to make a formal complaint. 


Need More Help?

Just fill in your details here if you need help in pursuing any rights during HMRC’s Compliance Checks or wish to discuss some other matters.  


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