Single Compliance Process for tax investigations

HMRC has a new enquiry process has led to an important change to how businesses will be told about tax investigations. What’s the full story?

What is the Single Compliance Process/SCP?

HMRC’s Single Compliance Process (SCP) is a framework for carrying out all tax investigations in a standardised way so that everyone involved knows where they stand. It’s a good idea, but it’s taking an age to implement, although HMRC has recently taken one step towards this.

What’s changed?

One bugbear with SCPs was that HMRC would first sidestep accountants and go straight to the taxpayer for information. This of course upset accountants and put taxpayers at a disadvantage by catching them on the hop. The good news is that HMRC has changed its opening strategy for enquiries involving SMEs.

How will the Single Compliance Process work?

If HMRC intends to start an investigation it will first tell the taxpayer in a letter and allow a week for them to say if they want to deal direct. If it doesn’t receive a reply within 14 days it will contact the acting accountant shown on its records. If it can’t get a response it will direct its questions back to the taxpayer.

Tip 1. A week isn’t a long time to respond, especially as letters from HMRC often sit around in their post room for days. The taxpayer might find the deadline has passed. In this case, contact the Taxman straight away and tell him what’s happened.

Tip 2. Statistics show that investigations are wrapped up more quickly and efficiently where an accountant or tax advisor gets involved as early in the investigation as possible.