So you want to get down to the nitty-gritty of a tax investigation?
Maybe you’re in the middle of an HMRC enquiry at the moment. Maybe you’ve just received your first notice of an upcoming investigation. Maybe you’ve been reading our previous posts and, as we always suggest, you’re getting yourself prepared.
But one question keeps cropping up.
What the heck is Schedule 36?
Well, don’t worry – because even if Schedule 36 sounds like some mysterious and strange procedure? It’s not as scary as it sounds. And the fact that it crops up a lot in our discussions?
As we’ll see today, while Schedule 36 is HMRC’s way of legally demanding information, it’s nothing to be concerned with. In fact, it’s use is incredibly commonplace, whether your facing an investigation into your income tax, PAYE, VAT, or even a host of other tax-related issues.
Because all Schedule 36 really is?
It’s just a way of requesting information. Really.
But let’s dive in for a closer look.
HMRC’s Information Powers.
It’s a daunting word, isn’t it? Powers. Except when you realise what it really means. Because though HMRC do have the statutory power to request information from you, HMRC also has its limitations. So during your tax investigation, don’t fret – they can only request information deemed reasonable to your case.
Meaning your worrying about your private life and finances being laid bare for all to see? It’s not going to happen.
Instead, what’ll happen is something like this:
During your tax investigation, Schedule 36 is usually invoked to obtain information that your HMRC officer thinks will speed up the process. And this is usually information related to the tax returns being debated. This request issued in the form of a notice in writing.
And so long as the information they’re requesting can be ‘reasonably required by the taxpayer’?
You have to provide it, we’re afraid.
But the good news is?
You should already have to hand.
So what does ‘reasonably required’ really mean?
Well, really speaking, it’s still up for debate. But in the best cases, ‘reasonably required’ means that HRMC officers can only ask for information that you should have been keeping in the first place.
What’s more, they’ll only be asking for information specific to your investigation. Still, if you’re unsure about what kinds of information they might ask for? We’ve got you covered – check out our previous post.
Can I appeal a notice?
Now, whether your tax investigation is just beginning or whether its been in full swing for some time, you may be thinking that you’ve received a notice of enquiry by mistake. But, either way, when it comes to Schedule 36, there are no right of appeals.
But the good news?
Once again, HMRC can only ask for information that forms part of your statutory records.
So if it isn’t reasonably required by yourself? If it’s not something you’re legally expected to keep?
You won’t be expected to provide it.
What if I’ve lost track of this information?
The simple answer to this? Get in touch. Really.
That said, there are a list of guidelines HMRC gives its officers to follow in deciding what is deemed as reasonable record-keeping, as well as what can or cannot be investigated. But the merit of reproducing every single point of Schedule 36’s chapters here? It’s debatable – especially when you consider the legal jargon and footnotes in use.
Instead, if you suspect HMRC aren’t playing fair? Get in touch.
So what can we take away with this if you’re facing a tax investigation?
If you’re faced with a Schedule 36 notice, you’re going to fall into one of two camps: those of you who are prepared, and those of you who are scared. And whilst that little rhyme might seem like a joke, it’s best to take the idea seriously.
Even if HMRC can only request information that you can reasonably require, you’re going to have to provide it.
And if you don’t have necessary information to hand? You’re going to want to figure out your next step.
As always, things will go a lot smoother during a tax investigation if there’s polite compliance on the taxpayer’s half. But once again, HMRC aren’t perfect. So if you’re being messed around? Or even if you are prepared, but still a little uneasy about what comes next?
Get in touch. We’ll give you peace of mind.
The Tax Haven.