§ Mr. Hickmetasked the Chancellor of the Exchequer how Inland Revenue or Customs and Excise inspectors carry out in-depth investigations into the tax affairs of companies, businesses or schedule D taxpayers.
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: An inspector will carry out an in-depth investigation into the accounts of a company or business only where he is not satisfied that the taxpayer has fully declared his profits. An inquiry into the business records and the underlying information from which they are constructed will normally involve correspondence and possibly interviews with the taxpayer, and with his agent if he has one. The inspector may use the statutory powers available to him in order to obtain further information, where this is considered necessary.
A VAT trader will be subjected to an in-depth investigation by Customs and Excise only where there is reason to suspect that deliberate tax evasion has taken place. Customs and Excise normally carry out control visits to all VAT registered traders using selective checking procedures.
§ Mr. Hickmetasked the Chancellor of the Exchequer how many companies went into liquidation, businesses ceased trading and schedule D taxpayers were declared bankrupt following in-depth Inland Revenue or Customs and Excise investigations, stating what proportion that was of those companies, and so on assessed for further tax in each of the years since 1979.
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: The Inland Revenue does not keep such records. This question could be answered in respect of VAT registered traders only at the cost of disproportionate time and effort.
§ Mr. Hickmetasked the Chancellor of the Exchequer how many in-depth investigations into companies, businesses and schedule D taxpayers the Inland Revenue and Customs and Excise have carried out where they have gone back up to 10 years for each of the years since 1979 to date; and how many such investigations revealed that further tax was payable, giving the total figures involved in each year.
359W
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: The table sets out, in respect of Inland Revenue investigations, figures for both over-10 years and under-10 years. Until 1982 records were kept to a year ending on 31 October, whereas from April 1983 they have
Year ended 31 October 1979 1980 1981 1982 1982–83 1983–84 1984–85 In-depth investigations Schedule D 46,025 44,285 48,516 51,735 52,759 52,875 51,568 Companies 1,329 1,634 2,996 4,349 4,769 5,479 5,347 Total 47,353 45,919 51,512 56,084 57,528 58,336 56,915 Further tax payable—Cases 38,673 38,768 44,743 48,951 50,524 52,831 52,025 Percentage of Cases 82 85 87 87 88 91 91 Yield (£ million) n/a n/a n/a 97.3 111.4 146.6 161.3 Cases where further tax payable going back up to 10 years n/a n/a n/a 47,792 49,330 51,674 50,947 Cases where further tax payable going back 10 years and over n/a n/a n/a 1,159 1,194 1,157 1,078 Percentage of cases going back 10 years and over 2.4 2.3 2.1 2.1 I regret that no statistics are available in relation to VAT.
§ Mr. Hickmetasked the Chancellor of the Exchequer how many companies, businesses and schedule D taxpayers following an in depth investigation by the Customs and Excise or Inland Revenue were given the choice to pay a lesser sum over a period of time or contest the full sum before the Commissioners, giving the sums involved.
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: A taxpayer may negotiate an agreed settlement with the inspector, or have his appeal determined by the commissioners. There is no choice of the type referred to the question of payment over a period of time normally arises only when, figures having been agreed, the taxpayer is unable to raise the funds to meet the liability and asks for an instalment arrangement. There is no provision in VAT legislation for this facility to be offered to VAT registered businesses.
§ Mr. Hickmetasked the Chancellor of the Exchequer why, in in-depth investigations by the Inland Revenue and Customs and Excise, the onus is placed on the taxpayer to show that further tax is not payable.
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: In relation to the Inland Revenue, it is provided by statute, in relation to taxes on income and profits generally and not only in connection with an in-depth
360W
Number of years included in settlement 1 2 3–4 5–6 7–8 9–10 [...]10 Income Tax 9,610 7,288 15,763 8,913 3,801 1,130 933 47,438 Corporation Tax 1,312 653 997 650 254 121 145 4,132 Total 10,922 7,941 16,760 9,563 4,055 1,251 1,078 51,570 Percentage of Total 21 15 32 19 8 2 2 100 been kept on a fiscal year basis. Consequently part of the October 1982 figures—for the period from 6 April to 31 October—are also included in the 1982–83 figures.
The yield for cases over and under 10 years is not available.
investigation, that if an inspector is disatisfied with a return he may make an assessment based on his best judgment. The taxpayer may appeal against that assessment and, in the absence of agreement between the taxpayer and the inspector, the appeal will be heard by the special or general commissioners. The law further provides that the assessment shall stand, unless at an appeal hearing it appears to the majority of the commissioners present, by examination of the appellant or other lawful evidence, that the taxpayer is being overcharged.
Assessments for VAT are raised only where Customs and Excise are satified to thier best judgment that there is evidence that an underdeclaration of tax has occurred.
§ Mr. Hickmetasked the Chancellor of the Exchequer what administrative directions set out how the Inland Revenue and Customs and Excise exercise their powers to carry out in-depth investigations into the tax affairs of companies, businesses and individuals paying tax under schedule D, after audited accounts have been submitted; and if he will state up to how far back such investigations normally go.
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: The directions given to inspectors of taxes are set out in head office instructions, and further information is given in training courses and guidance notes.
The following table provides details of the number of years covered by Inland Revenue investigations during 1984–85:
361WIn-depth investigation by Customs and Excise and the issue of additional assessments are not dependent on the prior submission of audited accounts which form only part of the basis of calculation of VAT liability.
§ Mr. Hickmetasked the Chancellor of the Exchequer what proportion of directors of companies or businesses or schedule D taxpayers who were assessed as liable to pay further tax after an in-depth investigation used professional legal or accountants' assistance in their dealings with the Inland Revenue at the time of agreeing to pay further tax.
§ Mr. Moore[pursuant to his reply, 10 February 1986, c. 330–31]: I regret that this information is not available.