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UK Trials New Tax Compliance Process

May 2011 - Tax & Private Client. Legal Developments by Hassans.

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The UK's revenue agency is to run trials of a single compliance process for enquiries across a range of different taxes, designed to simplify and standardize the system.

It is hoped that by altering the process for compliance checks in this way, HM Revenue and Customs (HMRC) will improve customer experience and reduce costs, as the check will only take as long as the risks and behaviours encountered dictate.

The single compliance process will focus solely on the risks and behaviours identified in cases and throughout the life of the compliance check, irrespective of the tax (VAT, income tax, corporation tax and pay-as-you-earn) involved.

The trials are to begin on June 1, and last for six months. They will be held in 10 different locations across the UK: Reading/Slough, Newcastle, Warrington, York, Exeter, London Euston, Southampton, Cardiff, Belfast and Edinburgh/Dundee.

Subject to the results of these trials, the government aims to roll out the process nationally from January, 2012.

Commenting on the scheme, David Gauke, Exchequer Secretary to the Treasury, said: "This government is committed to relieving the burden on businesses. We know that agents, individuals and businesses find some of HMRC?s current compliance practices drawn out and costly. A single compliance process could help HMRC improve the customer experience and reduce costs. HMRC is working directly with agents via the Compliance Reform Forum to help develop it, and will continue to work with them during the pilots."

The pilot's launch has, however, been criticized by accountancy firm Baker Tilly, which has called the move, and the speed at which it is to be unveiled, surprising. The details are certainly sparse, and the firm has noted that, at this stage, it is difficult to see how the new framework will work in practice. The company questions whether compliance visits will cover all relevant taxes, or just one, and stresses that the pilot ought to help clarify the resourcing implications and cost to both taxpayers and businesses.

Thus, with such questions currently unanswered, the scheme is likely to cause uncertainty for businesses, which, according to Baker Tilly, may be concerned that HMRC are planning to turn up on their doorstep, demanding immediate sight of all records. Moreover, it is argued, HMRC's intention in introducing this new framework is very unclear.

The Chartered Institute of Taxation has also indicated its concerns about certain aspects of the initiative, and says it is in discussions with HMRC over them.


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HASSANS - international law firm