The Inland Revenue and HM Customs and Excise have jointly launched a consultation to reform the departments' powers and tax collection processes which it hopes will lead to taxpayers complying with rules voluntarily.
Details of the HM Revenue and Customs consultation – entitled HMRC and the taxpayer: modernising powers, deterrents and safeguards - suggest the HMRC will attempt to rationalise its powers and the information required by tax collection departments, as the two divisions will be merged into one following the recent announcement by the Treasury.
A consultative committee of tax experts, business representatives and the views of others in the wider tax community will also be set up by the Revenue to discuss broad options for reform and look at the detailed proposals once gathered.
In particular, the combined HMRC says it wants to change systems so taxpayers information only has to be gathered once leading to quicker tax bill payments, with little disruption to taxpayers existing systems, working lives and preferences, and at a lower cost, in the hope it will encourage people to comply with tax rules voluntarily.
“Requirements should be as straightforward as possible to understand and operate and should be clearly explained. Where appropriate and possible there should be an opportunity to comply voluntarily,” says the report.
The consultation also suggests technology should be harnessed to help the division redesign its processes “so that liabilities can be settled sooner thus giving earlier certainty to taxpayers and businesses”.
The Revenue says any new proposals for data and tax collection will have to abide by the Hampton Review and comply with existing legislation on information-handling to protect tax payer confidentiality.
That said, the document suggests deterrents to ensure people pay their tax must also reflect the work which may then be required by the department to collect revenue which is not forthcoming from the end payer.
“Tools to obtain information or other material and their use in practice should balance the potential impact on the citizen, including the costs of compliance, against the risks they are intended to address. Where any decision can be challenged the route should be clear, including the time limit and the person or body to whom any appeal should be sent,” continues the consultation.IFAonline
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