What Does Section 9A Of Taxes Management Act 1970 Say About Tax Investigations?
By
HuutiMoney
If you are wondering about what section 9A of the Taxes Management Act of 1970 says about tax investigations, you will find the answer to this question in the following blog post as we discuss HMRC’s authorities and the taxpayers’ rights and responsibilities during a tax investigation. Additionally, we will also elaborate on how to respond to section 9A of the Taxes Management Act of 1970 tax inquiry as well as explore the potential consequences of ignoring it.
What Does Section 9A Of Taxes Management Act 1970 Say About Tax Investigations?
Section 9A of the Taxes Management Act 1970 addresses explicitly the procedures and powers that HM Revenue and Customs (HMRC) have when conducting tax investigations. This section outlines HMRC’s authority to gather information and conduct investigations to ensure taxpayer compliance with tax laws.
One important aspect of Section 9A is that it grants HMRC the power to issue information notices to taxpayers and third parties. These notices require the recipient to provide relevant information and documents that HMRC deems necessary for an investigation. In this case, failure to comply with an information notice can result in penalties or other enforcement actions.
Section 9A also allows HMRC to inspect and take copies of documents as part of an investigation. This includes the power to inspect business premises and seize relevant records that can provide essential information for the tax investigation such as the following:
- the amount of tax that one has paid
- their accounts and tax calculations
- details of their self-assessment tax return for a given year
- details of their company tax return
- details of their PAYE records and return (in case of employer)
- details regarding their VAT returns and records (in case of being VAT registered)
Additionally, Section 9A provides HMRC with the authority to obtain information from financial institutions and other third parties. This means that HMRC can request information from banks, accountants, and other parties who may hold relevant financial information about a taxpayer.
HMRC investigations can take several months to conclude, ranging from 3-6 months for simpler cases to up to 18 months for complex and large-scale cases. The tax authority can investigate tax returns dating back up to 4 years, but in cases of erroneous tax returns or suspected deliberate tax fraud, investigations can go back as far as 6 years and even 20 years, in extreme cases.
Therefore, it is important for taxpayers to be aware of Section 9A and understand their obligations and rights when it comes to tax investigations. Ensuring compliance with tax laws and cooperating with HMRC during investigations can help avoid penalties and other potential consequences.
How Should You Respond To A Section 9A TMA 1970 For Tax Investigations?
When facing a Section 9A investigation by HMRC, it is important for taxpayers to respond in a timely and appropriate manner. HMRC conducts these investigations to identify potential tax evasion or fraudulent activities. As a taxpayer, it is important to understand the process and how to navigate it efficiently.
First and foremost, it is advised to seek professional advice from a tax specialist or advisor as they have the expertise and knowledge to guide you through the investigation process and help you understand your rights and obligations. They can also communicate with HMRC on your behalf, ensuring that all necessary information is provided while protecting your interests. If you are looking for a tax adviser, you can take help from ICAEW.
During the investigation, it is crucial to cooperate fully with HMRC. This means responding promptly to any requests for information or documentation they may have. It is important to provide accurate and complete information to HMRC, as misleading or false information can lead to serious consequences.
It is also advisable to maintain meticulous records of all relevant transactions, documents, and correspondence related to the investigation. These records can help support your case and provide evidence of compliance with tax laws.
In some cases, it may be necessary to enter into negotiations or settlements with HMRC. This requires careful consideration and should be done in consultation with a tax professional. They can help assess the strengths and weaknesses of your case and negotiate on your behalf to achieve the best possible outcome.
Lastly, it is important to be aware of any time limitations or deadlines set by HMRC during the investigation. Failing to meet these deadlines can have serious consequences and may result in penalties or further action by HMRC.
What Happens If You Don’t Respond To A Section 9A TMA 1970 For Tax Investigations?
If you don’t respond to a Section 9A TMA 1970 tax inquiry letter, the next step in the process is the issuance of a Schedule 36 Notice by HMRC, which is a statutory notice. Failure to comply with this notice may result in penalties, including an initial penalty of £300 and daily penalties of £60.
Additionally, there is a penalty of £3,000 for providing inaccurate information to HMRC or failing to correct inaccurate information when it is discovered.
It is important to note that if the Schedule 36 Notice is issued with the approval of the Tax Tribunal, there is no right of appeal. However, if the notice is issued by an officer of HMRC, the taxpayer has the right to appeal to the Tax Tribunal.
When deciding whether to appeal a Paragraph 36 Notice, there are certain areas that HMRC cannot request, such as personal records and medical records. Additionally, documents covered by legal privilege cannot be obtained by HMRC, including litigation privilege or legal advice privilege.
Conclusion:
In summary, a Section 9A TMA 1970 tax investigation by HMRC outlines their authority in seeking information from taxpayers regarding their finances. If you’ve received a tax inquiry letter you will need professional advice to know your rights and responsibilities and cooperate fully with HMRC. You will also need to maintain accurate records, consider negotiations or settlements if necessary, and adhere to all time limitations or deadlines.
References:
Enquiries into tax returns: time limits for discovery assessments | ACCA Global
9A Notice of enquiry | Croner-i Tax and Accounting
Personal Tax Return Investigation – Section 9A Enquiry Letter