HMRC launches powers and penalties consultation

The consultation explores a range of topics that relate to HMRC’s enquiry and assessment powers, penalties and safeguards. The scope for this call for evidence only extends to those taxes, duties and National Insurance contributions (NICs) that HMRC administers. Responses can be submitted by any individual, business or organisation with views on how HMRC’s powers, penalties and safeguards can be made more efficient, effective and simple.

The call for evidence – which runs for 12 weeks from its release date of 15 February – is the latest consultation in the government’s ongoing review of the Tax Administration Framework, defined as “the broad system of instructions, guidelines and obligations underpinning the tax system”. The government published its 10-year strategy in July 2020 to “build a trusted, modern tax administration system”, which included a commitment to reform the Tax Administration Framework.

HMRC says that reform in the areas covered by this call for evidence “has the potential to simplify and modernise the tax administration framework relating to HMRC’s role to promote and enable compliance, respond appropriately to non-compliance, whilst ensuring taxpayers’ rights are protected”.

The address for responses to the call for evidence or for any queries is: tafrcompliance@hmrc.gov.uk. HMRC will be holding an online introductory session, via Microsoft teams, to discuss the Call for Evidence on 1 March at 11:00am.

Simplifying and modernising

HMRC has also published its summary of responses to its discussion document on simplifying and modernising HMRC’s income tax services through the Tax Administration Framework. The consultation, which was also part of the Tax Administration Framework Review, was initially released at the Spring Budget on 15 March 2023 and ran for 12 weeks until 7 June 2023.

HMRC says it is “transforming its digital services”, and that taxpayers will eventually have “the ability to interact with all of their information in one place online” or via HMRC’s mobile app.

“HMRC’s ambition is for a more real-time, integrated, and accurate data-led service for Income Tax and NICs by 2030,” the tax authority stated. It adds that, where HMRC is unable to collect NICs alongside a submission or return, it wants taxpayers to have access to digital services to manage their NICs position, including a service for customers to start making Class 3 NICs part-way through the tax year, for pension purposes.

In the ‘summary of responses’ document, the improvements the tax authority said it will make include:

• Putting taxpayers on the correct tax code more quickly following a change of circumstances
• Developing a digital self-serve tool allowing taxpayers to view their income tax position, and claim or declare income, allowances, benefits and deductions
• Improvements to HMRC’s ‘Check if you need to send a Self-Assessment tax return’ tool
• Improving and expanding digital registration services for income tax self-assessment (ITSA)
• Continuing to review the criteria used to determine who needs to file an ITSA return

HMRC’s summary of responses says the government also intends to make legislative amendments to facilitate the increased use of digital channels, including changes to:

• Allow HMRC to send specified correspondence to taxpayers digitally by default, unless they elect to continue to receive paper communications
• Require taxpayers to provide up-to-date electronic contact details to HMRC
• Allow HMRC more flexibility in how it communicates tax code changes to taxpayers

HMRC says it will be in touch with key stakeholders soon so they can provide insight on these changes.

The address for responses to the call for evidence or for any queries is: tafrcompliance@hmrc.gov.uk.

HMRC will hold an online introductory session, via Microsoft teams, to discuss the Call for Evidence on 1 March at 11:00am.

Find out more, including how to respond to the call for evidence.