§ Mr. Paul Deanasked the Chancellor of the Exchequer for how many previous years the Inland Revenue are entitled to require information and ask questions when investigating a taxpayer's financial affairs; by what statutory authority previous years are investigated.
§ Mr. Robert SheldonNo limit as to time is imposed on the power to obtain126W access to documents available to the Inland Revenue under Section 20 of the Taxes Management Act 1970, except for certain notices to third parties under Section 20(3), where the time limit is six years.
Investigations of tax liability are governed by the Taxes Management Act 1970. If it appears to the inspector that there are any profits in respect of which tax is chargeable and which have not been included in a return, or if the inspector is dissatisfied with a return, he may make an assessment to tax to the best of his judgment. An assessment to tax may be made at any time not later than six years after the end of the chargeable period to which the assessment relates. Extended time limits apply in cases of fraud, wilful default or neglect, as set out in Sections 36 to 41 of the Taxes Management Act 1970.
§ Mr. Paul Deanasked the Chancellor of the Exchequer if he will state the appropriate procedures for interviews between taxpayers and tax inspectors; and, in particular, whether a taxpayer has a legal right to be accompanied by advisers and to make a recording of interviews with tax inspectors.
§ Mr. Robert SheldonInterviews are usually informal and always conducted on the basis of consent after preliminary consultations with the taxpayer's professional adviser—normally an accountant. An interview is usually the most economical and reliable way of establishing facts within the taxpayer's knowledge which have a bearing upon his tax liability. The taxpayer's professional adviser is invariably encouraged to be present. The method of recording interviews is left to the agreement of the parties concerned.