Introduction

The Northern Ireland Tax Committee of Chartered Accountants Ireland is pleased to have the opportunity to comment on the above consultation launched on 24 February 2020. Information about Chartered Accountants Ireland and the Northern Ireland Tax Committee is provided on the previous page.

We wish to briefly comment on the current consultation and would be happy to discuss any aspect of our comments herein and to take part in any further consultations/initiatives in this area.

The role of agents

The Consultation poses the question “To what extent do you feel the draft charter sets out the areas which are most important to customers when interacting with HMRC?”. One area we feel is lacking in depth from the HMRC Charter is the important role agents such as Chartered Accountants play in supporting taxpayers and businesses in the UK to meet their tax obligations. This is very briefly referred to in the section on “Working with you to get tax right”. However, this could be made much more explicit. In recent years, the role of agents has taken on added importance as additional complexity has been added to the UK tax regime. For what would previously have been simple straightforward tasks, many more taxpayers are now turning to agents for support in addressing their tax obligations. The role of agents in supporting taxpayers will become even more vital with the announcement on 21 July 2020 that HMRC intends to extend Making Tax Digital for VAT from April 2022 and for income tax from April 2023.

Where the Charter refers to working “with anyone you’ve asked to act for you”, the revised Charter should at the very least contain a link to HMRC’s GOV.UK pages which provide taxpayers with more information on choosing an accountant. These pages were updated several years ago by HMRC in conjunction with various Professional Bodies, including Chartered Accountants Ireland.

At the time of writing of this submission, the pages we refer to which contained further links to the various Professional Bodies own membership pages could not be located on GOV.UK. It therefore seems appropriate that a further review of these pages be conducted now, and that they be reinstated, at the same time that the Charter is being revised.

This would also make sense in the context of HMRC’s current consultation “Call for evidence: raising standards in the tax advice market” and would support taxpayers in making informed consumer decisions when engaging the services of an agent. This consultation on the Revised Charter and the aforementioned consultation on raising standards in the tax advice market are inextricably linked as both were borne out of Sir Amyas Morse’s recommendations in his December 2019 “Loan Charge Review”.

In arriving at the revised Charter, HMRC should also consider conducting focus groups amongst a diverse range of taxpayers to discuss the precise content and messages contained in the current draft of revised charter.

Promotion of the Charter

The current Charter is not easily located on GOV.UK. This document should be at the forefront of GOV.UK when a taxpayer engages with HMRC in this way. It should also be accompanied by a link to guidance on what a taxpayer should do in circumstances where they may be considering making a complaint.

HMRC could consider developing a pop-up box on GOV.UK which directs taxpayers to the Charter for more information which taxpayers could then choose not to see again after they have been prompted at least once. A paper copy of the Charter should also be available on request to support the digitally excluded.

The House of Lords Economic Affairs Committee 2018 report “The Powers of HMRC: Treating Taxpayers Fairly” noted that evidence it received suggested HMRC was not always living up to the standards set in the Charter. That Committee made several recommendations linked to the Charter, including that the Charter be amended “to clarify HMRC’s responsibilities towards unrepresented taxpayers including that issues are clearly set out, legislation is explained and rights to review and appeals are made accessible”.

Sir Amyas Morse, in his Loan Charge Review, further recommended that the Charter be reviewed “to set higher expectations of performance during interactions with members of the public, and to ensure that staff are trained to meet these expectations.”

In the context of both of the above, we further recommend that once HMRC publishes its revised Charter, an external communication campaign be undertaken to publicise the revised charter. This should address its key messages and what has changed as the first step in rebuilding some of this lost confidence. It should also promote a clear message that HMRC takes its Charter obligations seriously and has acted on foot of the aforementioned recommendations.

Cost of compliance

Section 1.2 of the previous draft of the Revised Charter contained a specific commitment to keep any costs of compliance to taxpayers to a minimum. However, this is not included in the proposed new Charter and should be reinstated.

In recent years tax complexity has further added to the cost of compliance. The most recent HMRC Survey of Compliance costs 2018–19, published in September 2019, showed an increase of 3.4 percent from 2017–18. The increase in the 2017–18 publication was 6.5 percent.

Compliance costs are increasing on an annual basis and will further increase for businesses when the EU transition period ends on 31 December 2020 and further aspects of MTD are introduced in April 2022 and 2023.

With over 400 million additional customs declarations expected annually at a potential incremental cost in the region of £35–£40 each (based on anecdotal evidence from our members) where a business engages a customs expert, there can be no doubting that compliance costs will continue to increase in future years.

In addition, research by the World Bank in its “Doing Business” report notes that UK border and documentary compliance costs for UK imports are virtually non-existent at present. However, it estimates costs in the order of US$275 per shipment for border and documentary compliance for exports; costs which will be new to EU exports. The time to complete these tasks is estimated at almost a day and a half.

A recent example of how the cost of compliance can be increased unnecessarily for taxpayers is in respect of the coronavirus self-employed income support scheme. Agents were not able to make claims on behalf of their clients. We understand the rational for this was that the system was simple to use and HMRC had to make a trade off in developing the ability of agents to make claims for clients under the more complex job retention scheme. However, a further complication arose for some Northern Ireland taxpayers in the first phase of the scheme who in some cases were not able to set up a Government Gateway (“GG”) ID using a Northern Ireland driving licence (this matter has since been resolved) or Irish passport where they could not otherwise verify their identity.

Further anecdotal evidence from our members suggests that the inability of agents to make claims on behalf of their clients meant those who were digitally disabled or who could not set up a GG ID spent long periods of time on the phone to HMRC in order to process their claims. In addition, agents were only able to provide very peripheral support to those who were digitally capable as taxpayers had to make the claim themselves. This, in some cases, has led to increased costs for agents and thus their client. In other cases, agents are not able to recover these increased costs from their client whose business was negatively impacted by the pandemic.

Monitoring and values

HMRC replaced the Charter Committee with a new Customer Experience Committee in autumn 2018. Although the remit of this Committee is broadly similar to the previous Committee, the Committee’s name is not sufficiently linked to the HMRC Charter. In the context of both Sir Amyas Morse and the House of Lord’s recommendations in this area, HMRC should be more upfront about the work of this Committee and should consider renaming it “The HMRC Charter and Customer Experience Committee”. This Committee reports annually and should continue to do so. In 2020–21, the Committee’s focus should also seek the views of taxpayers on the revised Charter particularly in the context of the recommendations of the House of Lord and Sir Amyas Morse.

In addition, although the Customer Experience Committee does have independent members it is not truly independent as its role is to assist the Commissioners to fulfil their statutory responsibility to review performance against the Charter.

Overall, it will be important to ensure HMRC is held accountable for its performance against the standards set out in the Revised Charter. This can truly only be achieved when performance is judged against the Revised Charter by an independent body such as the National Audit Office.

The Revised Charter also contains a values-based section. It is right and proper in these modern times that this is included. To ensure these values are embedded every day in the working life of HMRC staff, the Revised Charter should also be promoted internally into HMRC and built into its training, performance monitoring and development process.

Freedom of Information

We note the scope of the Freedom of Information Act with regards to this submission. We have no difficulty with this response being published or disclosed in accordance with the access to information regimes. This response will be published on our own website in due course and will be available to all of our members and the general public.