That’s according to the Northern Ireland Tax Committee in its response to “Call for Evidence The Tax Administration Framework Review: enquiry and assessment powers, penalties, safeguards.” The Committee is highlighting that when an enquiry has been opened, which is accompanied by an informal request for information, a 30-day deadline is usually set for submission of information to HMRC with an expectation that this is provided within 30 days from the date of the correspondence, and not from the date the taxpayer receives it. However, often there is a delay in the taxpayer receiving the correspondence.
This, coupled with ongoing resource constraints being experienced by tax agents and their clients, can make it extremely challenging to reply within the 30-day deadline, which is even shorter when correspondence is not received until much later.
Once information is submitted, often a response is not received from HMRC for several months and in some cases, there have been delays of up to six months. Agents and taxpayers feel held to account by being made to work to meet unreasonable deadlines and demands when HMRC is not held to the same standard.
Taxpayers are able to apply to Tribunal at any time to request closure of an enquiry, however in reality, many are reluctant to do so due to the costs involved and therefore there is currently no real impetus on HMRC to respond promptly.
There is also inconsistency in being able to agree with HMRC a longer time period within which to respond to information requests. Some officers follow HMRC guidance in this area, however others do not.
The submission therefore makes the following overall recommendations:
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The deadline for provision of informal and formal information requests should not be set at 30 days “as rote” and should be agreed upfront with the taxpayer/their agent taking into account HMRC’s own guidance in this area;
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The agreed deadline should begin from the date that correspondence is received by the taxpayer and should be set in working days only;
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HMRC should respond more promptly once it has received information and should issue an acknowledgment to the taxpayer/agent setting out when a more detailed response can be expected; and
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To strengthen the rights of taxpayers, the power to request that a Tribunal directs HMRC to issue an enquiry closure notice should be strengthened where there has been a significant delay by HMRC of six months or more in responding to correspondence from the agent/taxpayer. This safeguard should enable the taxpayer to recover their costs where the Tribunal’s decision is that HMRC should close the enquiry. HMRC should be directed to do so within 30 days of the Tribunal’s decision.