§ Mr. Brightasked the Chancellor of the Exchequer (1) how many demands for tax arrears on turnovers estimated by the Inland Revenue were made in the year ended 31 March 1980; and how many of these were found to be accurate;
(2) how many representations have been received from businesses subject to inaccurate estimated assessments by the Inland Revenue;
(3) whether the Government will allow the costs incurred by companies inaccurately assessed by the Inland Revenue to be offset against their tax bills.
§ Mr. Peter ReesAn estimated assessment is made by the inland Revenue when the inspector is not in possession of all the relevant information needed to make an agreed assessment. Where a taxpayer believes an estimated assessment to be inaccurate his redress is to appeal against the assessment.
In the year ended 31 March 1980 there were about 2,530,000 estimated schedule D and corporation tax 483W assessments including both current year and past years, of which about 2,200,000 were the subject of an appeal. Most of these would be adjusted later to agree with the taxpayer's return of income. It is not possible to say in how many cases the original estimated assessment was accurate.
The position regarding costs incurred is set out in the Board of Inland Revenue's "Statement of Practice" Appendix A(8), a copy of which has been placed in the House of Commons Library.
§ Mr. Brightasked the Chancellor of the Exchequer (1) how many in-depth inquiries were conducted by the Inland Revenue into company accounts in the year ended 31 March 1980;
(2) how many in-depth inquiries into company accounts conducted by the Inland Revenue in the year ended 31 March 1980 were settled by payments of less than £100;
(3) how many inspections of company records were made by Inland Revenue staff in the year ended 31 March 1980.
§ Mr. Peter ReesThe extent of any inquiry into company accounts varies according to the type of accounts and the issues involved. Of the 550,000 company accounts dealt with in the year ended 31 March 1980 about 2,000 were selected for investigation because the inspector was dissatisfied with the accuracy of the accounts on which the company's tax computation was based. There were also about 65,000 other inquiries into company accounts which resulted in tax adjustments to the computations as submitted. No central record is kept of cases settled by payments of less than £100. In the course of this work inspectors would, in some cases, examine records and associated documents but no record of the total number of occasions on which this was done was kept.
In addition, Revenue staff made about 18,000 visits to business premises to inspect records in connection with the operation of PAYE and the subcontractor deduction scheme. There were also about 177,000 visits for the purpose of collecting PAYE tax in arrear. An analysis of these visits to show how many related to companies could not be supplied except at unjustifiable expense.