A Cheltenham based firm of Chartered Accountants is advising local businesses to be aware of a recent announcement by HM Revenue and Customs which could see them encouraged to discuss alleged tax breaches.

Mitchells has announced that businesses should forward any enquiries to their appointed tax agent.

HMRC issued the consultative document, Modernising Powers, Deterrents and Safeguards, in March with a view to introducing legislation in next year's Finance Act. The pilot scheme will be run for six weeks from 1 July 2006.

Nick Mitchell, partner at Mitchells, comments: "This document surrounds HMRC’s powers with regard to reviews and investigations. Perhaps the most uncomfortable aspect is set out in the section titled New Interventions To Assure Compliance. This states that the Revenue will contact businesses directly to discuss tax compliance where they feel an error has been made.

"Businesses should be made aware that they have no obligation to enter into discussion or correspondence with the Revenue as this is not a formal tax investigation. The Revenue have been put on notice that they may be in breach of agency law if they try to get information in this manner direct from taxpayers who have recognised tax agents.

"Our strong recommendation is that they do not give the Revenue any information and that all enquiries should be handled by their accountant. Those companies without accountants or tax agents are advised to consider appointing one as the investigation culture continues."

For more information call Mitchells on 01242 260 066.