Tony Margaritelli hopes that HMRC’s New Year’s resolution will be to be kinder, fair and more even-handed when it comes to dealing with taxpayers’ affairs.
There is no doubt that HMRC have decided that the best way to improve collection is to fire off a letter to anyone and everyone who could/might possibly have anything to do with the subject taxation matter at issue.
As so many are being sent out one wonders whether there is a special department that is literally going through the tax code line
by line and paragraph by paragraph, thinking ‘we haven’t sent out a letter about this before, so let’s’.
Does it work? Well, the jury is still out, but based on the simple fact that there seems to be no let up in their use HMRC must believe them to be effective – in fact, a major weapon in their armoury. And yet, just recently, the ICAEW have expressed their concerns, stating: “HMRC’s current approach to managing compliance using one-to-many campaigns is being undertaken without any meaningful evaluation as to whether it collects more revenue compared to opening enquiries.”
Let’s see if HMRC pay any attention, or if the next batch of post doesn’t just contain Christmas cards from friends and relatives.
The festive period is a time for giving and for caring and, of course, New Year is for resolutions. If there was one gift I would wish from HMRC it would be that they would care, and think about the effect they have on taxpayers who are not evaders or avoiders, who have fulfilled their obligations to the best of their and their advisor’s abilities, so that they didn’t worry them unless they honestly thought something was wrong.
Maybe they could make it their New Year’s resolution as well, but that brings us back to nudge letters…
The coming year looks like it will bring greater emphasis on compliance, as HMRC seek to make use of all those new staff they have been promised. For good taxpayers and their advisors it’s going to mean that despite doing nothing wrong they could have to spend more money to prove it. That means every additional pound spent on compliance needs to be spent effectively. That’s where contentious tax agents have to make sure that they hold HMRC to account, not just in a monetary way but to also point out inefficiencies in their approach and attitude to taxpayers.
Inefficiencies need to be called out so that the taxpayer can see that they are only being asked to provide what is correctly and genuinely required. Who knows – maybe, just maybe, HMRC will listen and make necessary changes.
Talking changes leads me to the ABAB’s (Administrative Burdens Advisory Board) latest report, where a few things caught my attention. How about this for openers: “Our ‘Tell ABAB’ survey revealed a worrying level of lack of awareness about MTD ITSA.
The survey also revealed that 75% of respondents believed that MTD would increase or significantly increase the time and cost involved in complying with their tax obligations; 64.3% also thought that this would be the case when required to keep digital records. Worryingly, 64.6% said they did not expect to see any benefits for their business or (in the case of agents) clients.”
What follows is: “There is clearly work to do to change or address these perceptions and concerns”.
‘Clearly work to do’ is an understatement and no doubt they will be looking at agents to get involved and explain the benefits to their clients, but the problem is for the massive majority of clients affected by MTD there genuinely are NONE.
And, yes, the 75% are correct – there is and will be increased costs. There, I’ve said it.
The report also covers the topic of reporting employee hours in payroll submissions, which is due to be brought in from 2026. Yep, that’s when the first MTD submissions are to be made, as well payrolling benefits in kind. You couldn’t make it up if you tried. Here again the ABAB were on the case, calling it “a real triple-whammy challenge for payroll software providers and external payroll bureaux to be ready in good time and gather the additional information needed to fulfil the new reporting responsibilities”. They followed up: “ABAB remains unconvinced that this data is required for the purposes of administering the tax system.” I’m not convinced, and I doubt many agents and businesses, especially small businesses, will be either.
Which brings me to the fact that this issue is being released earlier than normal to allow for Christmas and to give you something to read after the festivities and before you all get involved in the annual hiatus that is the January filing deadline. So may I wish each and every one of you a peaceful and happy holiday.
- Tony Margaritelli is the Publisher of HMRC EIP magazine