HM Revenue & Customs seems eager to litigate rather than accept reasonable arguments in tax disputes, even when the prospects of success are “less than 50 per cent,” according to the Chartered Institute of Taxation. The “unwelcome trend” is adding to a growing backlog of appeals for tax tribunals, the CIOT said in response to the House of Commons Treasury Subcommittee’s inquiry into the conduct of tax investigations and the resolution of tax disputes.
My news story of July 6 for Tax Notes (paywall) is now reproduced in full with permission:
HMRC’s Approach to Disputes Worsens Backlog, Tax Bodies Say (pdf)
As I reported, HMRC officials and CIOT president Ray McCann were scheduled to give evidence to the subcommittee’s inquiry on July 9. The evidence session was postponed following the resignations of Brexit secretary David Davis and foreign secretary Boris Johnson over the July 6 Chequers agreement:
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 A tax compliance update for Tolley’s Tax Digest
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 Old versions of tax law on government website – an update
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 guidance points to old tax law
Tax campaigners criticised a lack of progress on setting a timeline for the UK’s overseas territories to make registers of beneficial ownership public, after a London summit failed to produce new commitments on transparency. But Theresa May is determined to pursue her predecessor David Cameron’s efforts to secure public registers, a government minister told members of Parliament.
BVI premier Orlando Smith said the annual ministerial meeting between the UK and the overseas territories, held at the Foreign & Commonwealth Office on November 1 and 2, was “very cordial,” the Financial Times reported.
Christian Aid joined ActionAid and Global Witness in expressing disappointment that “the UK’s tax havens remain stubbornly resistant to following the lead on transparency set by the UK itself.”
Read more: My news story for Tax Analysts, 11 November (paywall).
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).
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.
A special unit collecting additional tax from high net worth individuals raised £416 million during the 2015-16 tax year, but HM Revenue & Customs has not yet identified which of the unit’s approaches to compliance work are the most effective, according to a National Audit Office report.
HMRC defended its methods after some media reports focused on the NAO’s finding that, while HMRC is currently conducting formal inquiries on about one-third of HNW taxpayers, only one such taxpayer has been successfully prosecuted since the unit was formed in 2009.
Read more: My news story for Tax Analysts, 2 November (paywall).
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.
New and complex tax compliance requirements pose major risks for financial institutions, some of whom may find it difficult to maintain sufficient expertise in a fast-changing regulatory environment, experts told the 14th Automatic Exchange of Information Tax Congress hosted by Osney Finance.
Some clients, having prepared for reporting under the U.S. Foreign Account Tax Compliance Act, believe they don’t need to worry about the common reporting standard (CRS), said Denise Hintzke, global FATCA tax leader at Deloitte. She highlighted differences between the two regimes and told delegates at the London event why they do need to worry about the CRS …
Read more: My news story for Tax Analysts, 17 September (paywall).
A reorganization of HM Revenue & Customs suggests that the department is thinking “more broadly in taxpayer terms,” a leading tax expert said, as a review commissioned by the Labour Party noted “considerable public dissatisfaction” with the quality of service at HMRC and called for the publication of large companies’ tax returns.
“As HMRC develops its digital services, it is a positive step to see it prioritizing changes to the customer-facing team,” Paul Aplin, vice president of the Institute of Chartered Accountants in England and Wales, said in a statement. “At a time when Brexit has created new challenges for businesses and growth is key to economic recovery, it is vital [that] businesses and their advisers can get simple actions done effectively and efficiently by HMRC.” Continue reading HMRC announces new structure as critics call for public tax returns
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
Freelancers and contractors could be forced out of the public sector by planned changes to the way off-payroll staff are monitored, the government has been warned.
Tax experts and industry bodies have urged HM Revenue and Customs to reconsider its plans to switch responsibility to public sector bodies for applying an established but controversial tax rule intended to counter arrangements designed to disguise employment.
Amid claims that the change could lead to an exodus of contractors, HM Revenue & Customs told CSW that the “genuine self-employed” would not be affected. “This measure is about public sector workers paying the right tax,” a spokesman said.
Read more: My news story for Civil Service World, 19 August.