INVESTIGATIONS – New enquiries scheme extended

The Taxman recently announced that he’s extending his trial of the Single Compliance Process (SCP) for tax enquiries. How do these differ from a normal enquiry?

The main difference is that the Taxman aims to settle SCP enquiries much more quickly. He’ll be more open about what he’s looking for, but don’t be bullied into agreeing something simply to meet the SCP timetable. Always ask the Taxman for his notes of meetings etc.

 When does the SCP apply?

The Single Compliance Process (SCP) is a new approach to how the Taxman carries out tax enquiries on small to medium-sized businesses. A trial of the SCP was launched last year and this has now been extended. It is likely therefore, that if you are in one of the 18 trial areas and the Taxman wants to carry out an enquiry, or compliance check as he now likes to call them, it will be through the SCP  .

What is the benefit of the SCP?

The idea of the SCP is for the Taxman to reduce the overall time he spends on each investigation. Currently, this can be hundreds of man hours, but the target for an SCP is to complete it in as little as one and a half days for simple cases and up to eight days for complex ones. This is good news because less time spent by the Taxman should mean less of your accountant’s time will be needed. This translates into less stress and worry for you and hopefully lower accountancy fees.

How will this save time?

The Taxman claims that the SCP is a far more open process than old style enquiries. In other words, he’ll be more open from the outset about what he thinks is wrong rather than wasting time dancing around the issues trying to catch you or your accountant out.

  • where he is reviewing a particular aspect of your company’s tax affairs he won’t, as he often currently does, carry out a “fishing expedition” to see what else he can find.
  • he will aim to carry out a review of your records on either your or your accountant’s premises. While nobody likes a visit from the Taxman, this can be the lesser of two evils compared with having to copy and send off a large volume of documents
  • he will only carry out a sample check of records instead of going through the lot with a fine-toothed comb

In return, the Taxman expects you to co-operate and provide him with access to the information he needs. Naturally, as you have nothing to hide we can’t see a problem with all this.

What are the negatives?

Most tax experts agree that the SCP is a good idea but there are some worries. For example, the Chartered Institute of Taxation is concerned that a tax inspector keen to meet SCP targets might try to bully a business into agreeing a settlement quickly and not give it time to properly consider the issues.

How should you respond if the taxman picks your company?

Advice : While you should always aim to respond quickly to the Taxman’s questions or requests, you’re entitled to a reasonable amount of time to look into and consider contentious issues. It won’t count against you to remind him of this.

Advice : One time saving aspect of the SCP is that the Taxman won’t automatically produce notes following meetings etc. for your approval. But you can ask for these and we strongly recommend you do. Our experience shows that they’re often helpful to identify misunderstandings and will give you and your accountant the opportunity to correct them before too much time is wasted.