HMRC reports on the implementation of new powers and safeguards since 2012
By Susan Cattell, Head of Tax Technical Policy
19 February 2021
Susan Cattell discusses HMRC’s report on the implementation of new tax administrative powers, obligations and safeguards introduced since 2012 – and highlights some important HMRC commitments to address the findings of the evaluation.
Evaluation of powers and safeguards
ICAS gave evidence to the House of Lords Economic Affairs Committee for its 2018 report - The Powers of HMRC: Treating Taxpayers Fairly. One of the proposals made by the Committee was that there should be a review of all powers granted to HMRC since the conclusion of the Powers Review in 2012.
In his response to the Committee the Financial Secretary to the Treasury (FST) noted that it is important that the powers granted to HMRC are exercised in a way that maintains and enhances public trust – which means taking care that powers are used consistently and proportionately, taking into account an individual’s circumstances. Taxpayers also need to be able to access the safeguards provided in legislation.
A number of actions were announced, to maintain and develop public trust in HMRC operations. These included the establishment of a Professional Standards Committee and an evaluation by HMRC of the implementation of powers introduced since 2012, engaging with stakeholders, including taxpayers and their representatives. The FST decided that a full review of HMRC powers was not necessary because the powers were properly scrutinised before being granted by Parliament - and the government considered that they remained necessary and proportionate.
The evaluation process and ICAS evidence
The evaluation was expected to be published early in 2020 but work was delayed by the general election and then by the pandemic. HMRC established and worked with a new powers evaluation forum made up of representatives from 16 organisations (including ICAS) representing taxpayers, their advisers and the Office of Tax Simplification.
The forum discussed the scope and methodology of the evaluation, including which powers to prioritise for more detailed examination. HMRC’s final report, published in February 2021, draws on HMRC’s engagement with the forum, which in turn drew on representatives’ experiences and those of their members and stakeholders.
ICAS tax committees discussed the evaluation and we held a meeting with HMRC in Edinburgh in February 2020. We also submitted written evidence (one of around 70 pieces of evidence submitted).
Feedback from members indicated that many issues they regularly experience, arising from HMRC’s exercise of its powers, are common to various powers (including some pre-2012 powers). The ICAS evidence therefore took the form of a ‘themed’ response. Whilst commenting on some of the specific powers on the list agreed with HMRC, it also allowed us to give input on more general issues, such as HMRC’s approach to behaviour and penalties (particularly ‘reasonable excuse’ and ‘taking reasonable care’). We also highlighted the need for better communications to taxpayers affected by new powers.
The review process concluded with a series of ‘deep dive’ discussions covering the powers identified for more detailed examination, including the Corporate Criminal Offence, Accelerated Payment Notices and the GAAR. ICAS was pleased that discussions on cross-cutting themes - reasonable excuse and raising awareness of new obligations – were also included.
What is in the HMRC evaluation report?
HMRC’s report sets out 21 commitments to address the findings of the evaluation. These commitments are intended to provide an improved experience for taxpayers and support the government’s 10-year strategy to build a trusted, modern tax administration system. Highlights include:
- Improved communications about new powers, including use of data to ensure better targeting at the right audiences and the development of new and innovative communication approaches.
- Improvements to guidance, including decision-based guidance to help people find the answers they need and guidance in alternative formats (for example, online videos).
- Better compliance communications and strengthened assurance processes around one-to-many activity (to include seeking external input and feedback).
- Raising awareness of the new HMRC Charter and using quarterly reviews and the Charter Annual Report to monitor progress and identify and act on areas for improvement.
- Continuously improving technical tax and core compliance capabilities to ensure that HMRC’s officers have the resources, skills and capability to deliver the Charter standards.
- Work by HMRC’s Compliance Extra Support team to ensure that those who need extra help are identified and provided with appropriate support during compliance enquiries.
- Continued HMRC engagement with voluntary and community sector organisations to provide support for individuals who need extra help.
- HMRC to seek views from taxpayers, agents and their representatives on opportunities to improve awareness and uptake of the statutory review process.
- HMRC will review and update guidance to clarify the range of factors that may contribute to reasonable excuse, taking account of an individual’s personal circumstances: this will be supported by strengthening training products, including case studies, to help build capability, confidence and consistency of approach where HMRC’s officers are considering the application of reasonable excuse.
Future engagement with HMRC on powers, obligations and safeguards
ICAS called for a review of HMRC’s exercise of powers introduced prior to 2012 and the overall policy underpinning HMRC’s powers. We are therefore pleased that HMRC has committed to considering what further work on powers and safeguards should be taken forward as part of the project to build a trusted, modern tax administration system.
HMRC will also be continuing to work with the evaluation forum members to ensure that the implementation of any future powers reflects the conclusions of this evaluation and the HMRC commitments.
ICAS would like your feedback
The Financial Secretary to the Treasury thanked ICAS members for the evidence, expertise and insight provided, which was vital to ensuring the evaluation was as robust and comprehensive as possible.
Please keep giving us input on your experiences of dealing with HMRC – particularly in the light of HMRC’s commitments in the evaluation report and the standards set out in the new HMRC Charter.
ICAS belongs to the Charter Stakeholder group which will be giving input in March on how HMRC is performing against the standards, for inclusion in the Charter Annual Report. Please send us your feedback by emailing tax@icas.com.