HMRC has updated its guidance on what happens during compliance checks on businesses, including details of what constitutes a ‘reasonable excuse’
The factsheet covering unannounced HMRC visits for tax inspections approved by the tribunal has been updated for the first time since its original publication in 2009.
It provides information about the visit and the taxpayer’s rights. The guidance states that if a taxpayer chooses not to allow HRMC to carry out the inspection, they will be charged a £300 penalty. They may also have to pay further penalties of up to £60 a day until the inspection is carried out.
It confirms that HMRC will normally only visit taxpayers at home if the business is run from there. Visits to a small business may take a few hours, but for large or complex businesses, or if the matters HMRC is looking at are complex, it may take several days.
The guidance states HMRC may ask to take some records away to check, and has the right to remove any records that are produced during the inspection or that the notice of inspection says HMRC is authorised to inspect.
The guidance on HMRC compliance checks undertaken by agreement or advance notice has been updated to revise the explanation of what is meant by 'a reasonable excuse'.
Taxpayers who have a reasonable excuse for not allowing HMRC to carry out an inspection that has been approved by the tribunal, will not be charged a penalty.
The guidance says a reasonable excuse is something that stopped a taxpayer from meeting a tax obligation on time which they took reasonable care to meet. It might be due to circumstances outside their control or a combination of events. Once the reasonable excuse has ended, taxpayers must put things right without any unnecessary delay.
HMRC’s guidance points out: ‘Whether you have a reasonable excuse depends upon the particular circumstances in which the failure occurred and your particular circumstances and abilities. This may mean that what is a reasonable excuse for one person may not be a reasonable excuse for someone else.’
Examples of reasonable excuses provided in by HMRC include serious illness; the death of someone close; or experiencing a flood or a fire.
Guidance Compliance checks: unannounced visits for inspections approved by the tribunal - CC/FS5 is here.
Guidance Compliance checks: visits by agreement or advance notice - CC/FS3 is here.
