A tax compliance update for Tolley’s Tax Digest

My tax compliance update for the May 2018 issue of Tolley’s Tax Digest starts like this:

This Digest draws together and summarises the primary and secondary legislation, and draft income tax and VAT notices, relating to HMRC’s Making Tax Digital project. At the time of writing some commentators had suggested that the implementation of Making Tax Digital for VAT might be deferred in the light of pressures created by the Brexit process, but no announcement had been made. The Office of Tax Simplification recommended in April 2018 ‘urgent work’ to simplify the business tax system. Continue reading

Charity Tax Commission invites comments on effectiveness of tax reliefs

An independent commission reviewing the UK’s tax treatment of charities has suggested that Brexit may present opportunities for addressing several issues. The Charity Tax Commission, which the NCVO established in October 2017, has invited comments by July 6.

Tax reliefs for charities are estimated to be worth £3.8 billion a year, and reliefs for donors are worth £1.5 billion, according to the commission.

My news story of March 19 for Tax Notes (paywall) is now reproduced in full with permission:

UK charity body launches review of tax breaks (PDF)

Tax barrister denounces ‘assessment by computer program’

HM Revenue & Customs defended its transformation strategy after a tax barrister claimed that the move to a centralised administration, with liabilities assessed “according to computer program”, is detrimental to the rule of law.

My news story of March 6 for Tax Notes (paywall) is now reproduced in full with permission:

Tax Barrister Denounces ‘Assessment by Computer Program’ (PDF)

Old versions of tax law on government website – an update

Last week HM Revenue & Customs apologised for linking to some very old legislation, in a guidance note on new criminal offences, and removed the offending links. HMRC guidance at GOV.UK does not normally include statutory references, but if that is going to change there is a clear risk that the same mistake will be made again.

Legislation.gov.uk is described as “the official place of publication for newly enacted legislation”. Great care is needed in relation to older tax legislation, including some of the major consolidation Acts.

For example, go to Income Tax Act 2007 and you’ll see a prominent warning about an apparently very large number of changes that have not yet been processed. Continue reading

HMRC guidance points to old tax law

You can find out about criminal offences relating to offshore income and assets in a new guidance note on HMRC’s website. But the guidance points to some very old tax law.

While HMRC guidance for taxpayers published on GOV.UK does not normally include statutory references, this guidance note has six.

At the time of writing, there are links to sections 7 and 8 of the Taxes Management Act 1970 as reproduced at Legislation.gov.uk, the “official place of publication for newly enacted legislation”.


UPDATE 22 March: HMRC has deleted the links to sections 7 and 8 and apologised for the error.


The problem is that while some progress has been made in processing changes enacted in annual finance acts, Legislation.gov.uk still presents the original versions of some of the key consolidation acts. The original TMA 1970, which turned 48 last week, is here. Continue reading

HMRC, business records checks and the tax gap

HM Revenue & Customs risks stigmatising small and medium-size enterprises unless it provides a more detailed analysis of the UK tax gap, the Chartered Institute of Taxation warned in January. A delay in publication of an HMRC review of its business records checks programme, scrapped in 2015, appears to have added weight to concerns that the tax authority has overestimated non-compliance by SMEs.

My news story for Tax Analysts ($), published on 16 January, is now reproduced in full with permission:

HMRC Risks Stigmatizing SMEs in Absence of Record Checks Report, CIOT Says (PDF)

Designing good compliance into the tax system

HM Revenue & Customs estimates the total UK tax gap, the difference between the tax collected and the amount that should be collected “in theory”, at £34bn. Just £1.7bn relates to avoidance (excluding international tax planning strategies such as profit shifting, which are being addressed slowly but multilaterally), and £6bn relates to interpretation of the law.

In contrast, criminal attacks account for around £5bn and evasion another £5bn, while £3.5bn is attributed to the “hidden economy”.

Read more: My article for AAT Comment, 12 January