HMRC should review its existing compliance powers before any new powers are introduced

This was the key recommendation of the Institute’s Northern Ireland Tax Committee in its response to the HMRC consultation ‘The Tax Administration Framework Review - new ways to tackle non-compliance’. This consultation proposes several amendments to existing powers/potential new powers for HMRC including partial enquiries, amendments to the conditions for making certain claims, reform of Revenue Correction Notices and a power to require taxpayers to self-correct. The Committee also took the opportunity to highlight the lack of progress being made on tax simplification and made a number of recommendations to reduce tax complexity.

The Committee’s key recommendations can be read on page 9 and in summary are as follows:

• A full review of HMRC’s existing powers, deterrents, and safeguards should be undertaken, and their associated administration processes, before any changes are made to existing powers, or any new powers are introduced,
• A range of measures should be undertaken to tackle tax complexity, which should as a minimum include the establishment of a Tax Simplification External Forum which reports annually to Parliament,
• HMRC should consider the possibility of requiring certain large employers to claim flat rate expenses on behalf of their employees via PAYE Real Time,
• HMRC should consider if a system could be implemented in the UK for claiming relief for employment expenses by enabling supporting evidence to be uploaded to the taxpayer’s Personal Tax Account with services also available to agents,
• The time limit within which a taxpayer can reject a Revenue Correction Notice should be longer and should not begin until it has been received by the taxpayer,
• HMRC should not introduce partial enquiries for the reasons cited in the submission.

Overall, the Committee concluded that more broad ranging reform of HMRC’s compliance powers appears to be warranted similar to the different levels of compliance interventions in Ireland which include voluntary self-correction powers for non-deliberate errors by taxpayers.