What figures can an HMRC inspector legitimately ask for?

None of us is likely to thank HMRC for starting an enquiry into our tax return. The best way to view one is as a necessary check that only collects tax from those who avoid it unfairly. The aim is so that you and other law-abiding taxpayers don’t have to pay more than your dues. However, tax inspectors are known to be eager beavers who sometimes overstep their authority, so you do need to be on your toes.

Imagine this scenario: HMRC has started an enquiry into your 2016/17 personal tax return. The inspector is now asking for information for an earlier year to help them check 2016/17. Are they allowed to do this?

Enquiry window

HMRC is bound by a rigid timetable in which it can open an enquiry into your or your business’s tax returns. This is known as the ‘enquiry window’, and it can be a little tricky to get to grips with it. There are essentially two ‘enquiry windows’, and these depend on whether you submit your return on time or after the normal deadline:

  • If you submit your return to HMRC on or before the normal deadline, it has up to twelve months from the date your return was submitted to start an enquiry.
  • If you submit your return to HMRC after the normal deadline, the enquiry window runs until the next quarter day (30 April, 31 July and so on) following the first anniversary of when you submitted your return. For example, if you submitted your 2016/17 return on 1 March 2018 (a month and a day late), the enquiry window ends on 30 April 2019.

What if I amend my return?

You can amend your tax return at any time within the twelve months following the deadline for submitting it. The amendment doesn’t change the enquiry window for the original return, but there will be a separate enquiry window for the amendment. This runs from the date you made the amendment to the quarter day that follows its first anniversary.

Tip. Where an enquiry is started after the window for the original tax return, but within that for an amendment, HMRC can only make enquiries regarding the amendment. This is a point sometimes overlooked or not understood by tax inspectors.

Earlier year information?

Another mistake made by overly keen inspectors is to ask for information about periods prior to that covered by the tax return they are investigating. They shouldn’t do this. If they do, you should politely but firmly refuse to provide it.

Out of bounds

Tax inspectors have been known to argue that they can’t properly check the figures for the year they are enquiring about without understanding how a figure for an earlier year was arrived at. Typically this happens where they are reviewing figures in accounts which include adjustments brought forward from an earlier year. For example, the opening value of equipment which qualifies for capital allowances. This is a spurious argument and again, you should politely refuse the request.

Inspectors can’t insist you provide them with figures for periods prior to the investigation. Where a figure from, say, an earlier period has a bearing on the tax return under enquiry you will need to provide it, but you aren’t obliged to justify it with further evidence. Politely decline any such request from HMRC.