HMRC has responded to Chartered Accountants Ireland’s recent letter regarding the need for a soft-landing in respect of VAT and customs changes due to the UK’s exit from the EU. The response confirms that HMRC has taken our points into account regarding its proposed approach to compliance with the new NI VAT regime in particular. The Institute continues to discuss tax and related EU exit issues with HMRC and the Government, and is happy to accept member’s feedback at any time.

According to HMRC’s response, HMRC’s compliance approach will look different in some areas during the first phase, when HMRC will focus compliance activity on the areas of highest risk. Where HMRC finds non-compliance, it will be tailoring its response. HMRC will continue to respond firmly to evasion, fraud or other deliberate non-compliance.

As with GB-to-EU controls, HMRC will be focusing on high-risk traders and organised fraud. While doing this, HMRC will be building up a picture of compliance risk.

HMRC won’t be taking a punitive approach to traders who are trying to do the right thing but make a mistake. Instead, HMRC is aiming to provide traders with support to get on the right footing so they can comply with their obligations for the future. However, penalties will be charged if there is deliberate non-compliance.

You can read our letter in full in the Source Material section of this edition.