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

UK government postpones summer finance bill, extends digitisation timetable

The UK’s “summer finance bill” will now be introduced in September and will set out a deferred timetable for implementation of the controversial Making Tax Digital programme, the government announced …

Taxpayers and advisers had been “waiting with bated breath” for news of the finance bill, CIOT President John Preston said. While the measures dropped from the pre-election bill will be reintroduced in “more or less the same form,” detailed questions remain to be answered … Read more:

My news story for Tax Analysts, July 14 (paywall)

HMRC urged to reconsider timing of Making Tax Digital project

HM Revenue & Customs has come under increased pressure to reset the timetable for its Making Tax Digital (MTD) project, with tax professionals warning that small businesses will struggle with what accountants call the most far-reaching reform of the UK tax system for generations.

Last week the Chartered Institute of Taxation warned that the spirit of voluntary compliance is at stake if the government continues to pursue an unrealistic timetable for implementing compulsory digital record keeping.

“Tax systems exist for the benefit of society, not vice versa, and the business case for any change to the tax system should be based on the total economic impact, not just [aspects affecting HMRC],” the UK tax committee of the Association of Chartered Certified Accountants said as six MTD consultations closed on November 7.

Read more: My news story for Tax Analysts, 9 Novmember (paywall).

‘Aggressive’ Making Tax Digital programme may backfire, UK tax bodies warn

The spirit of voluntary compliance is at stake and some tax advisers may be unable to cope with demand if the UK government continues to pursue an “unrealistic” timetable for implementing compulsory digital record keeping, according to tax professionals.

The warning came days after a senior member of Parliament told Chancellor Philip Hammond that “every effort” should be made to make the Making Tax Digital (MTD) project a pilot programme, perhaps over several years. HM Revenue & Customs told MPs that MTD will help small businesses avoid errors and reduce the tax gap.

The April 2018 timetable is “unreasonably tight,” John Cullinane, tax policy director at the Chartered Institute of Taxation, said in a press release. “There is widespread agreement that digitisation can bring efficiency and other benefits to HMRC and taxpayers alike. The government appears to be forcing the pace in the belief that requiring even very small businesses to go digital in a tight timescale will transform their record-keeping and reduce the tax gap, helping HMRC to recoup its investment in the project.”

Six consultations on MTD will close on November 7.

Read more: My news story for Tax Analysts, 4 November (paywall).

See also:

CIOT press release 3 November.

ICAEW Tax Faculty submission to APPG inquiry into “public confidence in HMRC’s capability to collect tax fairly and effectively,” 28 October.

Tax tweets: Treasury committee hearing on Making Tax Digital

The digitalisation of tax returns will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs on the Commons Treasury Committee on 25 October. (Read more at Accountancy Age.)

Here are some of my tweets on the proceedings:

Continue reading Tax tweets: Treasury committee hearing on Making Tax Digital

Making Tax Digital project must be reset, experts tell MPs

The digitalisation of tax returns will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs on the Commons Treasury Committee.

HMRC is consulting on the Making Tax Digital (MTD) project until 7 November. The project has “possibly very adverse implications for hundreds of thousands of small businesses,” committee chair Andrew Tyrie said.

ACCA head of taxation Chas Roy-Chowdhury said that while businesses with tax agents are aware of MTD, smaller businesses “probably have no idea whatsoever what’s going to come down the track”.

Read more: My news story for Accountancy Age, 26 October.

UK Office of Tax Simplification urged to take proactive approach to complexity

The UK’s Office of Tax Simplification should focus on preventing rather than curing complexity, according to tax professionals responding to the office’s “high-level strategy” consultation. The OTS says that while its mandate does not extend to a “formal say” on future policy, its goals include embedding simplification into the policy-making process. One expert told Tax Analysts that given the right focus and resources, the OTS could “hold the key to wholesale reform.”

Read more: My news story for Tax Analysts October 15 (paywall).

The Making Tax Digital debate on Twitter

MPs on the Treasury Committee resumed their UK tax policy inquiry this week and much of the discussion concerned the Making Tax Digital project, which is the subject of six HMRC consultations, an apparent lack of awareness among small businesses, and a great deal of uncertainty among those who do know about MTD.

My tweets during the live broadcast, reproduced below (latest first), captured just a few of the key points made during the committee hearing by Bill Dodwell, president of the Chartered Institute of Taxation, and three representatives of small business. We can expect a transcript of the hearing to be published soon. Continue reading The Making Tax Digital debate on Twitter

Office of Tax Simplification calls for clearer strategy and better public debate

The increased use of roadmaps setting out the direction of U.K. tax policy would increase confidence and trust in the tax system and help to reduce uncertainty arising from the Brexit vote, the Office of Tax Simplification has said in response to a joint project to improve tax policymaking.

The experience from the Business Tax Roadmap first published in 2010 and updated in March 2016 was positive, but the government’s intentions in other areas are unclear, according to a July 2016 paper setting out the initial findings of the project, conducted by the Chartered Institute of Taxation, the Institute for Fiscal Studies, and the Institute for Government.

Read more: My news story for Tax Notes, 3 September (paywall) published by Tax Analysts.

Chancellor strengthens tax simplification team ahead of independence debate

Leading tax commentators have welcomed the appointment of three new non-executive directors to the board of the UK’s Office of Tax Simplification (OTS). The appointments were announced as MPs were set to debate a finance bill amendment intended to ensure that the OTS is seen to be independent of the government.

OTS Chair Angela Knight said the new directors’ skills and experience will increase the office’s ability to provide “excellent advice on how to take forward the strategy and simplify the tax system for business and for individuals”.

Read more: My news story for Tax Notes 29 August (paywall) published by Tax Analysts.

‘Making Tax Digital’ proposals draw mixed reaction

UK tax professionals welcomed proposed measures to ease the transition to digital tax reporting but one leading expert told Tax Analysts that the government failed to take account of the Brexit vote’s impact on the UK economy. The publication of six long-awaited consultation papers was delayed for several months because of the EU referendum and subsequent change of government.

HM Revenue & Customs released the consultation papers on the Making Tax Digital (MTD) project on August 15, saying that more than a million small businesses will be able to benefit from MTD without updating HMRC quarterly or keeping digital records.

Read more: My news story for Tax Notes 16 August (paywall) published by Tax Analysts.

 

HMRC consults on measures to simplify employee benefits tax

A flurry of HM Revenue & Customs consultations launched August 9 reduced a considerable backlog, but there remained no sign of long-awaited consultations on HMRC’s contentious Making Tax Digital (MTD) project … An HMRC spokesman told Tax Analysts that no date has been fixed yet for the launch of the MTD consultations.

The consultations published August 9 included three relating to employment income: Continue reading HMRC consults on measures to simplify employee benefits tax