Quicker Enquiries Trial Extended

HMRC extend trial of Single Compliance Process

In the summer of last year, HMRC began trialling an initiative designed to improve and speed up the tax enquiry process for small and medium-sized businesses (SMEs), called the Single Compliance Process (SCP). This trial phase has now been extended to allow for further testing in some of the more technically complex areas.

In devising SCP, HMRC is bringing to the table what they know and believe works well from Self Assessment enquiry; both full and aspect, employer compliance and assurance work.

SCP is aimed at improving the quality and consistency of HMRC enquiry work by adopting a more collaborative approach with businesses and their agents, increasing the efficiency and effectiveness of their officers, reducing unnecessary delays and focussing solely on the aspects that the Revenue needs to focus on.

During the trials SCP is used for all compliance checks on SME business returns but not pre-return compliance checks. Neither is SCP used in cases involving fraud, work carried out by HMRC specialist teams or the checking of VAT repayment returns.

Enquiry Framework

HMRC’s approach during SCP uses five process stages which are common to most enquiries.

Stage 1 – Planning

A case is assigned and considered for enquiry. Neither the business nor their agent will be involved at this stage.

Stage 2 – Contact

HMRC will contact the business and their agent to arrange the enquiry, request information and issue formal enquiry notices. The method of contact will depend on the tax and whether a formal enquiry notice is required. For indirect tax cases, contact could be by telephone or letter and for a direct tax case this will be by letter.

Stage 3 – Process

At this point HMRC will carry out a risk-based enquiry and take the relevant and necessary action to resolving or closing the case. The major change with SCP is that HMRC are seeking to move away from a position where they have routinely called for lots of business records to be sent to them for inspection.

Where HMRC review records at a taxpayer’s premises, they will carry out appropriate sample checks, test records and, if required, organise a further visit to complete their checks.

Notes of discussions will be made at the time but HMRC will not issue such notes unless asked to do so.

Stage 4 – Resolve

Once the enquiry has been brought to a conclusion HMRC will invite the taxpayer to agree to any changes to be made to their returns.

Stage 5 – Close

Finally, HMRC will finalise paperwork including confirming that the enquiry is to be closed, including issuing a closure letter.

Using this framework HMRC has proposed four different approaches, with varying amounts of time spent on each case:

Level 1 (1 ½ days)

For compliance checks where there is no need for a face-to-face meeting and where, for example, the check could be carried out by correspondence or telephone and with minimum inconvenience.

Level 2 (2 days)

For compliance checks which require a face-to-face meeting.

Level 3 (4 days)

For more involved compliance checks requiring a greater amount of time spent meeting with the taxpayer.

Level 4 (8 days)

For compliance checks with characteristics that require the same approach where tax evasion is involved.

The estimates of the maximum time to work each enquiry are based on the average amount of time which HMRC officers spend actually working through the enquiry.

By streamlining the enquiry process, HMRC believes that SCP will reduce the burden to SME’s by reducing the time taken to complete enquiries.

Should the trials prove successful SCP could then be rolled out for implementation.

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