Improving UK Tax Administration
Susan Cattell outlines ICAS recommendations for improving UK tax administration.
What has ICAS recommended?
Bring together all tax management and administration provisions in a new Taxes Management Act
ICAS strongly believes that trust in the UK tax system can be developed and maintained only if taxpayers and their advisers can readily understand HMRC powers, deterrents and safeguards. Transparency should be a key feature but the legislation dealing with tax administration is currently scattered across various statutes, making it difficult for taxpayers to access and apply to their own circumstances. It has not kept up with technological developments, so it is no longer fit for purpose. Piecemeal attempts to patch up the system, such as the recent announcement of legislation on automated processes, do not address the underlying problems.
The time has come for a consolidation of all tax management and administration provisions in a new Taxes Management Act. In producing this the opportunity should be taken to update the legislation to take account of digital developments and to rewrite it in the more user-friendly style which the Tax Law Rewrite project applied to other important tax statutes.
Ensure that HMRC is properly resourced so it can provide adequate service levels and support for all taxpayers
A well-resourced and efficient tax authority is essential for the smooth running of tax administration. Reductions in HMRC headcount and diversion of resources to deal with Brexit have caused problems for agents and taxpayers, particularly businesses and individuals who are not large enough or wealthy enough to have an HMRC Customer Compliance Manager.
Inability to obtain appropriate support from HMRC undermines confidence in HMRC’s ability to deliver a fair and effective system. It also increases compliance risks because many taxpayers (not just those dealt with by HMRC’s Large Business and Wealthy units) encounter complex tax problems, but those with limited resources currently find these very difficult to resolve. Named points of contact at HMRC need to be provided for a broader range of agents and taxpayers. For others, HMRC’s helplines need to work better and there must be effective escalation of complex queries to the appropriate HMRC specialist.
Digitalisation should not be used to reduce HMRC resources further, without proper consideration of the impact on HMRC service levels: some of any resources freed up, should be redirected to providing adequate service levels and support for all taxpayers.
The benefits of adopting our recommendations
- Improving understanding of HMRC powers deterrents and safeguards will develop trust and support voluntary compliance
- Making it easier for taxpayers and agents to access relevant legislation and to apply it correctly to their own circumstances will reduce non-compliance
- Ensuring that the tax system is perceived to be fair builds confidence in HMRC
- Providing adequate HMRC support and service levels for all taxpayers and agents will reduce compliance risks and improve voluntary compliance
Join the debate
The recommendations in the ICAS Future of Tax paper were agreed by the ICAS Tax Board in 2020 and inform the work of ICAS Tax. They will be reflected upon and revised to reflect economic, social and political developments.
There are also opportunities to join ICAS tax committees to discuss these recommendations and many other tax policy and practical matters – email firstname.lastname@example.org to find out more about being a committee member.