On 30 September 2026, HMRC updated its Enquiry Manual (EM), the internal guidance governing how compliance officers conduct tax enquiries under Schedule 36 Finance Act 2008 and the Taxes Management Act 1970. The revision incorporates statutory changes from the Finance Act 2026, including expanded information powers for digital records, clarified “reasonable excuse” defenses for electronic data failures, and new procedural safeguards for multinational enterprise (MNE) group audits aligned with OECD BEPS 2.0 documentation requirements. The manual is binding on HMRC officers and serves as a critical reference for tax advisors managing client enquiries.
Key Takeaways
- Digital Record Access Powers: Officers may now require taxpayers to provide electronic data in machine-readable formats (CSV, XML, API extracts) within 30 days, with penalties up to £3,000 per failure, significantly raising the technical bar for record-keeping compliance.
- MNE Group Audit Coordination: New Chapter EM5000 establishes a “Lead Officer” model for cross-border corporate groups, mandating joint risk assessments with foreign tax authorities under the Multilateral Convention on Mutual Administrative Assistance, affecting UK-headquartered MNEs with revenues exceeding €750 million.
- Reasonable Excuse Narrowing: The manual explicitly excludes “software malfunction” and “third-party provider failure” as reasonable excuses for late digital submissions unless the taxpayer demonstrates due diligence in vendor selection and backup procedures, directly impacting MTD for Income Tax compliance strategies.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement