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ACCA Applied Skills · Taxation (UK)

Compliance Checks, Appeals and Disputes for ACCA TX-UK

This chapter covers what HMRC can do when it doubts a return, and what you can do in response. You learn enquiries, determinations, discovery assessments, record keeping, appeals, alternative dispute resolution and postponement of tax. Most questions test time limits, who can act, and the next step. Learn the limits as a table and apply them to dates.

What this chapter covers

This chapter covers the procedures around the tax system rather than the calculations. It asks four things. How long must you keep records? When can HMRC check a return? What can HMRC do if a return is missing or wrong? How can you challenge a decision, and what happens to the tax in the meantime?

It links to the rest of TX-UK because every tax in the paper has a return, a filing date and a payment date. Income tax, corporation tax, capital gains tax and VAT all use these procedures. Interest and penalty figures from the Tax Rates and Allowances, such as 8·50% on underpaid tax, 3·50% on overpaid tax and the VAT late payment penalties, often appear alongside the procedures.

Expect this content mainly in Section A and the Section B cases as objective questions. A short written part can also appear in Section C, for example advising a client on what HMRC can do. The material is rule-based, so it rewards careful memory work and accurate use of dates.

This chapter is compact, with few numbers, so it is one of the cheapest to learn well. Objective questions are marked all or nothing, so you must know the exact time limit or the exact order of steps. Many students skip it because it has no calculations, and then drop easy marks. The same facts also help in written answers, where you need to say who must act, by when, and with what result. A day of focused learning here can turn into reliable marks on exam day.

The procedures relating to compliance checks, appeals and disputes: topics in the order to study them

  1. 1Record Keeping RequirementsStart here: it is the simplest set of rules and sets up the time periods HMRC works within.
  2. 2HMRC Compliance Checks and EnquiriesNext, learn how HMRC checks a filed return, because the enquiry window drives everything that follows.
  3. 3Determinations and Discovery AssessmentsThen see what HMRC can do when a return is missing or when an enquiry window has closed.
  4. 4Appeals Against HMRC DecisionsOnce you know the HMRC actions, learn how you challenge them and the 30-day appeal limit.
  5. 5Alternative Dispute Resolution and Postponement of TaxFinish with settling disputes without a tribunal and what happens to the tax payable while the dispute runs.

How to prepare The procedures relating to compliance checks, appeals and disputes

Treat this chapter as a set of rules, limits and sequences. Work in short, repeated sessions rather than one long read.

  1. Build one summary sheet with record keeping periods for individuals, companies, VAT and PAYE, and say it aloud until you can write it from memory.
  2. Draw a timeline for an enquiry: filing date, enquiry window, closure notice, amendment. Add a discovery assessment timeline beside it and mark the time limits for each behaviour type.
  3. Practise with dates. Take a filing date and work out the last date for an enquiry notice, then the last date for an appeal. Write each answer in full.
  4. Learn the appeal route in order: HMRC decision, appeal within 30 days, HMRC review or tribunal, then higher courts on a point of law. Note which step is optional.
  5. Link postponement to interest. Check the interest rates in the Tax Rates and Allowances, since they are provided, and know when interest runs on tax that later becomes payable.
  6. Finish with mixed objective questions on the whole chapter, then write a short advice paragraph from a scenario. Review every wrong answer against your summary sheet.

Common mistakes in The procedures relating to compliance checks, appeals and disputes

  • Mixing up determinations and discovery assessments.

    Fix: Link determination to a missing return and discovery assessment to a return that was filed but is too low.

  • Applying the wrong time limit for a discovery assessment.

    Fix: Tie each number to a word: normal, careless, deliberate. Test yourself with short scenarios before the exam.

  • Using the wrong start date for record keeping periods.

    Fix: Write the starting point next to each period on your sheet and check it in every question.

  • Forgetting that appeals have a short deadline.

    Fix: Treat 30 days from the decision as the first fact you write in any appeal answer.

  • Assuming postponement means no interest or no tax.

    Fix: State that only the disputed amount can be postponed, the undisputed tax is still due, and interest runs on any amount that later becomes payable.

  • Writing general comments in Section C instead of applying the rules.

    Fix: Name the client's action, give the rule and the date, and state the result. Use the facts in the question.

Last-day revision: The procedures relating to compliance checks, appeals and disputes

  • HMRC can open an enquiry into a return without giving a reason, including random checks.
  • An enquiry notice must normally be given within 12 months of the filing date, with a longer window for late returns.
  • An enquiry ends with a closure notice, and the taxpayer can ask the tribunal to direct HMRC to close it.
  • A determination is HMRC's estimate of tax due where no return has been filed, and filing the return replaces it.
  • A discovery assessment applies when HMRC finds tax lost and the return did not give enough information.
  • Discovery time limits depend on behaviour: 4 years normally, 6 years if careless, 20 years if deliberate.
  • Business records for individuals are kept 5 years after the 31 January filing date; non-business records 1 year after it.
  • Company records are kept for 6 years from the end of the accounting period.
  • An appeal to HMRC must normally be made within 30 days of the decision.
  • After an appeal, you can ask for an HMRC review or go to the First-tier Tribunal, then the Upper Tribunal on a point of law.
  • Mediation is a form of alternative dispute resolution that can settle a dispute without a tribunal.
  • You can apply to postpone payment of disputed tax, and interest still runs on postponed tax that ends up payable.

The procedures relating to compliance checks, appeals and disputes practice questions

The procedures relating to compliance checks, appeals and disputes in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

The procedures relating to compliance checks, appeals and disputes: frequently asked questions

Is this chapter tested with calculations?

Mostly it is not. Questions test rules, time limits and sequences, often as objective questions. You may need to work out a date or a simple amount of interest using the rates provided.

Do I need to memorise the interest rates?

The rates of interest on underpaid and overpaid tax are given in the Tax Rates and Allowances. You need to know when interest applies and how to use the rate, not memorise the figure.

What is the difference between an enquiry and a discovery assessment?

An enquiry is a check on a return that HMRC starts within a fixed window after filing. A discovery assessment lets HMRC collect tax it finds was lost when the enquiry window has passed, but only if the conditions are met.

Can I stop paying tax while I appeal?

Not automatically. You can apply to postpone payment of the amount in dispute, and if agreement is not reached the tribunal can decide. Any undisputed tax is still due on time.

How should I study this chapter on my phone?

Keep a short notes file with time limits and the appeal route. Revise it in short sessions and test yourself on dates. Then do objective questions to check you can apply each rule.