Dealing with a tax probe

GD writes: I am a partner in a small business and I have received a letter from my tax inspector stating that my last year´s (1996-97) tax return is being investigated. I am worried because the taxman says he is issuing a "Notice under Section 9A Taxes Management Act" and I do not know what this means. Does it imply that I am in trouble with the Inland Revenue and what should I do?

Answer

With the introduction of self-assessment last year, if the Revenue wants to raise any queries on your return it has to do this formally by notice under the section you have quoted. Previously it was able to ask the questions by way of an ordinary letter that sounded much less threatening although, in reality, the information it requires may well be the same. The letter you have received will explain what information is wanted. Your return may have been randomly selected for inquiry - the Revenue has powers to do this - or it may be that further details are needed to support some of the entries on your return. The inquiry will generally be under one of two headings; either an "aspect inquiry", which means that the inspector is querying a specific aspect of your return, or a "full inquiry", which will usually require you to provide the inspector with all your business books and records and other documents. In either case, you will have been given a date by which the inspector wants the information. If the information requested is straightforward and is a simple clarification or correction to the actual form, you can probably deal with it yourself. If it is a full inquiry into your tax affairs, you will need to obtain professional assistance. When the Revenue has finished its inquiries it will write to confirm this and let you know what adjustments it considers necessary. If, during the course of the inquiry you believe the inspector has "no reasonable grounds" for continuing the inquiry, you may apply to the General Commissioners to have it closed. This is designed to ensure the inquiry is not unduly prolonged.