HMRC asks companies and agents to check tax returns

As reported by ICAEW

Letters are being sent where HMRC believes that the corporation tax liability declared by the company in its most recent company tax return is much lower than expected compared to similar companies.

Both the company and its agent, where it has one, will receive a letter. The letter sent to agents will include a list of the companies they act for that have received a letter. The letter warns the company and agent that HMRC may open a compliance check into the company’s tax returns in the next 12 months. 

Action to take 

The company/agent is asked to check the company’s tax returns for errors and: 

• if an error is found, either amend the return or, where the deadline for amending the return has passed, make a voluntary disclosure to HMRC; or

• if no errors are found, let HMRC know using the contact details given in the letter.

To allow the company time to check, and if necessary, correct its tax returns, HMRC will not start a compliance check before the date given in the letter. If no action is taken by that date, HMRC will use the information it has to determine whether to open a compliance check.  

HMRC recognises that the company may not be able to pay the tax it owes immediately. The letter directs companies in this position to HMRC’s guidance on paying by instalments. Interest will be charged on any tax paid late.  

The letter explains that HMRC will charge a penalty where an error is found in the return. Penalties can be reduced depending on whether a disclosure is prompted or unprompted and will take into account the company’s actions in helping HMRC to correct the error. This is explained further in HMRC’s guidance. The letter confirms that HMRC will treat any disclosures made after the receipt of the letter as being prompted.