An HMRC enquiry is the method through which a taxpayer’s return is reviewed and challenged. A particular tax return can only be subject to one notice of enquiry. At present, only a single closure notice may be issued when all aspects under enquiry are in a position to be included.

Following HMRC’s consultation, Tax Enquiries: Closure Rules, which ran between December 2014 and March 2015, the Chancellor confirmed on 23 November 2016 that legislation will be brought forward to provide HMRC and taxpayers “earlier certainty on individual matters in large, high risk and complex tax enquiries”.

This would go some way in bringing about greater flexibility in HMRC’s ability to settle areas of dispute, particularly in complex cases. Such complex enquiries typically extend over a prolonged period of time, which increases uncertainty for taxpayers.

The amount of time it can take for an enquiry to be resolved varies widely: although less complex individual issues can often be resolved more quickly than others. Rules that would permit both HMRC and taxpayers to trigger closure of more straightforward issues under enquiry could help reduce uncertainty for taxpayers, provided it does not encourage HMRC to keep more complex issues under review for an even longer period of time than it does now.

More details on these revised rules are expected to be published in the coming weeks.

Links:

https://www.gov.uk/government/publications/autumn-statement-2016-documents

https://www.gov.uk/government/consultations/tax-enquiries-closure-rules