Earlier this year, Rishi Sunak, the Chancellor of the Exchequer, held the UK’s first ‘Tax Day’ in which HMRC released several calls for evidence on the future of the tax administration framework.
We published our call to members and received around 70 written responses. In addition, we held three ‘Talking Tax’ sessions with members where we presented the proposals from HMRC and discussed how these new policies could be structured to support their businesses and clients.
Informed by member feedback, ACCA submitted three responses to HMRC. These make a number of suggestions for improved customer engagement and trust, and simplification of tax, as well as highlighting potential risks. We have begun follow-up engagement with HMRC and will continue to work with officials on implementation.
Below is a summary of some of our key comments and links to the full responses on our website.
Raising standards in the tax advice market
- While HMRC’s proposed requirement for anyone offering tax advice to hold professional indemnity insurance (PII) cover will provide a baseline level of protection, it should not be regarded as a solution to taxpayer protection without consideration to standard setting for agents (code of conduct/ rulebook), monitoring of advisers, disciplinary measures and sanctions. These measures should also be applied alongside a programme of taxpayer education about the benefits of advisers that hold professional body membership, offering additional routes for recourse.
- It is vital that the proposed measures do not apply additional burden of proof or compliance to advisers that already hold professional body membership (and therefore PII). ACCA already collects this and can provide assurance.
- We support an existing legislative distinction between advice and guidance and defer to the FCA definition.
- We recommend an HMRC portal for taxpayers enabling them to check an adviser’s PII cover before engaging, positively identify advisers who have failed to comply with PII requirements and identify advisers' professional body membership.
Read our full response and our joint PCRT body response.
HMRC is proposing new methods for the timely payment of tax, ie bringing the calculation and payment of tax on CTSA and ITSA closer to the point where the income or profit arises, paying tax based on the taxpayer’s current year position using, where possible, up-to-date data.
- We are supportive of HMRC’s proposals for a modernised system for more timely payment of tax. ACCA recommends that this also include repayments and refunds to customers, providing an opportunity for HMRC to uphold its commitment under the charter to be more responsive and improve customer trust.
- Of the proposed options, a majority of members are supportive of a quarterly payment regime modelled on energy provider payment regimes whereby customers are able to build up credit or debit throughout the year with subsequent payments adjusted to reflect under or over payment. ACCA clarifies that we would be keen to explore the detail around interest, penalties, reliefs and allowances under such a system.
- We warn of potential difficulties of maintaining real time information for digitally isolated communities and request that HMRC considers the impact and available resource for the agent and practitioner community that will need to meet the administrative demands of timely and more frequent reporting of tax.
- We also highlight the severe impact many of our members believe this would have on cashflow, in particular for those with seasonal demand and those that require working capital to replenish stock such as hospitality and retail.
Read our full response.
Creating a 21st century tax system
HMRC is considering how tax administration could change to create a trusted, modern tax administration system. This includes creating a better experience for individuals and businesses, enables opportunities to further reduce the tax gap, and helps build greater resilience and responsiveness to future crises.
- When surveying members in the formulation of our response, we found that 45% cited partial or high levels of distrust in the UK tax system and HMRC’s administration of it. We highlight commonly cited issues such as outdated routes for customer engagement, inconsistent messages from HMRC staff when resolving queries, systems triggering unnecessary inquiries and the accuracy of data held by HMRC systems.
- This reform offers an unmatched opportunity to improve accessibility and engagement with the tax system. Members are keen to see simple changes such as allowing taxpayers and authorised agents to view historical tax records, allowing customers to link personal and business accounts to improve user access and improving agent authorisation processes as well as the ability of customers to easily appoint new representatives.
- We are supportive of HMRC’s focus on simplicity, clarity and certainty for taxpayers. However, to achieve these aims it is absolutely essential that HMRC prepares its infrastructure to deliver reforms. These may include basic system functionality for data capture, turnaround of calculations and assessments, countermeasures for providing corrections and up-to-date figures and basic levels of staff training on compliance.
- Members are keen to see reliable communication with HMRC to support the implementation of such a system change. ACCA suggests that HMRC should consider more transparent and accessible CRM systems as well as mechanisms (preferably digital solutions) for taxpayers and agents to better track HMRC case progression where investigations or inquiries are raised against taxpayers.
Read the full response.
The ACCA UK Policy team is always keen to hear from members with feedback and insight on government policy and support. Members can share feedback or request to join our UK Policy Panel at UKPolicy@accaglobal.com.