HM Revenue and Customs
HMRC powers and your rights
This advice note explains how the creation of HM Revenue and Customs (HMRC) will affect you in your day to day dealings with officers carrying out checks on behalf of the new Department. It sets out the approach HMRC compliance officers will adopt in their dealings with you, and your rights in relation to some of the more common contacts they have with you in respect of VAT, excise and customs duties, PAYE and NIC, Income Tax and Corporation Tax, tax credits.
HM Revenue and Customs brings together the direct taxes and other duties that were previously administered by the Inland Revenue and the indirect taxes and customs functions that were dealt with by HM Customs and Excise (HMCE). You may want to know whether HMRC officers have different powers now from the ones they had before. The existing powers and taxpayer rights for individual taxes and duties have been transferred into the new department without any changes.
We are working to ensure a consistent approach across all taxes and duties, including a co-ordinated approach to enquiries into your tax affairs, but individual tax regime powers remain unchanged. This means that we will not use the powers that relate to one tax or duty to obtain information about another tax or duty. However, any officer of HMRC, whether formerly an officer
of Customs and Excise or of the Inland Revenue, can use those powers that exist in relation to the specific tax they are looking into. If an officer of HMRC obtains information that is also relevant to other areas of HMRC they can pass on that information for immediate or future follow-up action.
Here are the answers to some initial questions you may have:
1. Q. When you contact me, will you tell me which tax, duty or tax credit your questions relate to?
A. We will always tell you specifically what tax, duty or tax credit we want information about. For example, we will usually telephone you to say that we intend to visit to inspect your VAT, customs or excise duties records. And if we intend to make an enquiry into your income or corporation tax return or tax credit entitlement we will tell you in writing. If you are still unclear about which tax, duty or tax credit our questions are about, you should ask us and we will tell you unambiguously.
2. Q. Will you tell me in advance that you want information from me or want to look at my records?
A. We will normally tell you in advance that we require information or want to look at your records, although we may, in certain circumstances, make an unannounced visit to look at your VAT, customs or excise duties records.
3. Q. Will I find that an officer I’ve been used to as someone who handles my income tax affairs, for example, will now contact me about my VAT?
A. All HMRC officers will in law be authorised to use all the HMRC powers. But initially officers of the former HMC&E will generally continue to deal with your VAT, excise and customs duty matters, and officers of the former IR will continue to handle your income (including PAYE and NIC) and corporation tax and tax credits affairs. We will however be piloting different ways of working, and this is likely to include some integrated or joint visits and enquiries. If we intend to carry out a joint visit we will tell you in advance, and will give you the opportunity to decline.
4. Q. If you want to have a meeting about my income and corporation tax or tax credits affairs, will you want to hold it at my business premises, as your practice is now for VAT, customs and excise?
A. We already hold meetings at business premises for income and corporation tax (for tax credits, meetings more usually take place at your home) by mutual agreement, as this will often be the best way of quickly resolving any outstanding issues. But for income and corporation tax and tax credits we only do this with your consent. The reasons for deciding whether we need a meeting, and if so where it should take place, will not change. And you will continue to have the same rights you do now to decline our suggestion of a meeting.
5. Q. If you contact me to tell me you intend to inspect my VAT records, for example, will you extend your inspection to include my income or corporation tax or tax credits affairs once you are on my premises?
A. We will only review the records relating to the tax, duty or tax credit we have told you we will be looking at. If we intend to review a number of taxes, duties or tax credits at the same time we will tell you in advance, and we will give you the opportunity to decline. If in the course of their review an officer of HMRC obtains information that is relevant to other areas of HMRC they may pass on that information for immediate or future follow –up action.
6. Q. If an officer visits me to inspect my VAT records, for example, will they be accompanied by an officer who wants to review records I’ve kept for PAYE & NICs, income or corporation tax, or tax credits?
A. Only if we’ve told you in advance, and you’ve agreed to the meeting covering the different taxes. One officer of HMRC may want to look at a number of taxes at one time, but if we intend to do this we will tell you in advance and give you the opportunity to decline.
7. Q. What happens if during the course of your inspection, review or enquiry you obtain information about one duty or tax credit that you think is also relevant to another duty or tax credit?
A. We will always make it clear to you at the beginning of our inspection, review or enquiry which tax, duty or tax credit we intend to ask questions about. And we will only ask for information that relates to the area we have told you we will be looking into – we will not request information that may only be relevant to another area. But if when we consider the information we have properly obtained we think it may also have a bearing on another area we will pass that information on for immediate or future action. There is no change here – the IR and HMCE have always been able to exchange information they considered would be relevant to the other department.
8. What can I do if I think the visiting officer is asking for information they are not entitled to request?
A. If you are unclear why you are being asked for a particular piece of information you should ask the visiting officer to explain their reasons for requesting it. If you are not satisfied with the explanation you should say so, and you can refuse to provide the information if you consider it is not relevant to the area the officer is looking at. If you and the officer cannot agree about the relevance of the information, and the officer still considers they need it, they will be able to use formal powers to obtain it if they can show it is relevant to the area they are dealing with. If you want a further explanation you should contact the officer’s manager. The officer will provide their manager’s contact details if you ask them to.
9. Q. If you want to look at my records relating to more than one tax, for example VAT and PAYE & NIC, will you try to co-ordinate your visits? For example, should I tell you if I receive a phone call to book a VAT visit if you have already told me you intend to inspect my PAYE records?
A. Yes, this will help particularly in the transitional period. We will try to co-ordinate our visits if you ask us to, or we may suggest it if we think it would be helpful. But this may not always be possible.
10. Q. Do these answers apply in all circumstances?
A. These answers apply to most of the compliance contacts you will have with us. They will not apply if we think you may have committed serious fraud.
If you want to find out more detailed information about our existing powers and your rights, please refer to Codes of Practice published in respect of matters formerly dealt with by Inland Revenue and Public Notices for information published in respect of matters formerly dealt with by HM Customs and Excise.