Finance Act 2007 changed the rules about when HMRC can open an enquiry into individuals' and companies' self-assessment tax returns.
The general effect is that the enquiry window will close 12 months after the date of delivery of the return, rather than 12 months after the statutory filing date.
In this respect, the Revenue has now set out an operational practice it intends to adopt in relation to groups of companies.
Businesses that are members of a group that is not a 'small group' in Companies Act terms are excluded from the change to the enquiry window.
By law, HMRC will still be able to open an enquiry into the company tax return of any member of a large or medium-sized group up to the anniversary of the statutory filing date, however early the return is delivered.
HMRC want to encourage these larger companies to file early, however, and therefore, where practical to do so, their 'aim is to open all enquiries into a group's returns within 12 months of the delivery of the last individual company tax return from any member of that group'.
Where it is not possible for HMRC to meet the group anniversary target, they will continue to open enquiries as necessary, within the statutory deadline. HMRC say that their ability to meet the group anniversary target in relation to a particular group will necessarily depend upon their internal organisation, and where the group's corporation tax affairs are dealt with.
HMRC's Large Business Service deals with the tax affairs of the very largest companies. All such companies are allocated a dedicated customer relationship manager. The manager will try to agree a timetable with the group tax manager for compliance assurance activities. This will relate to the delivery of the group's returns, the handling of any risks identified and the opening of any formal enquiries. Where it is practical to do so, CRMs will agree a timetable that meets the group anniversary target.
The local compliance large and complex customer group handles the tax affairs of the largest companies outside the Large Business Service.
Customer managers allocated to this section will discuss with the group whether it will aim to deliver its returns significantly before the statutory filing date.
Where this is the case, they will ask the group to write to the manager when the last group member's return is delivered and, unless there are over-riding reasons not to do so, enquiries will be opened into the relevant company tax returns within the group anniversary target.
Where no CM is in place, the relevant officers will try to meet the group anniversary target wherever possible.
The remaining large and medium-sized groups are dealt with in much the same way as smaller companies, in local offices.
HMRC are not able to offer the necessary degree of co-ordination across such groups to undertake to meet the group anniversary target in these cases.
It should be remembered that the group anniversary target is an operational practice, not a legal requirement. HMRC reserve the right to fall back on the statutory time limit.
