HMRC wants you to come along and celebrate World Tapir Day – sorry, Tax Administration and Maintenance Day – which also really did happen on 27 April, as evidenced by a Written Ministerial Statement and a warm and fuzzy news about how “savers are set to benefit from a simpler tax system”, in a world where simplifying the tax system involves issuing just 23 more technical documents.
The real detail starts at Summary of Tax Administration and Maintenance: Spring 2023.
I have said previously that HMRC wants to turn itself into a Ministry of Information, using its tried and tested powers to force taxpayers and businesses to act as its informants, assessors and collectors, to add ever more data to the grist. And, thanks to digitalisation, there is no practical limit to the breadth and depth of the data that HMRC thinks others should be able to compile, format and submit, at minimal cost – to HMRC, of course.
Some of the highlights from HMRC’s wishlist include:
We have touched on this before, in the July 2022, August 2022 and October 2022 One Month in a Minute updates.
HMRC wanted businesses and taxpayers to provide details along the lines of:
The professional bodies have pointed out that:
HMRC’s Summary of Responses seemed largely unmoved by such concerns, but there were several references to support for HMRC’s proposals from specialists in academia, policy and research. It is difficult, though, to see how such statistically infrequent support – no matter how strong it may have been – should properly be weighed against the potential inconvenience to literally millions of businesses, employers and directors.
HMRC has resolved to proceed as follows:
Most tax agents will already record the dates and amounts of specific dividends for each of their director clients, and the commencement and cessation dates for their self-employed clients. Interesting times ahead for payroll bureaux, though.
As noted above in our May 2023 MIM, HMRC laments that TMA 1970 doesn’t let it get away with all the things it wants to do is too outdated for the modern world and real-time information demands. HMRC has therefore issued a Call for Evidence because it would quite like a code similar to that adopted by the Australian Tax Office, which is very flexible and much more in line with HMRC’s dream of being able to demand whatever it wants, from whomever it likes, whenever it damn well feels like it – and ideally, only the once.
The Call for Evidence has questions such as (OK, I admit I am taking liberties here: obviously, these were not the real questions that HMRC asked in the Call for Evidence. They are just the questions I suspect HMRC really wanted to ask):
The Call for Evidence referred to HMRC’s existing powers, including the new Financial Institution Notices, or FINs. Readers may recall that, initially, (back in 2018), HMRC had come over all teary-eyed about how it really needed more streamlined powers to bypass the taxpayer when requesting financial information from UK banks, etc., in order to be able to respond promptly to requests for information from overseas tax authorities, in line with its information exchange obligations. Readers may also recall that, in HMRC’s first mandatory report to Parliament on its use of said new power, it was revealed that only 40% of the first FINs had actually been used to deal with requests from foreign tax offices. HMRC had also casually mentioned that, far from limiting its enquiries to purely financial matters, it used the FINs to demand details such as the taxpayer’s location metadata, for every time they’d logged in to the bank’s online services. All this while shackled to the yoke of TMA 1970 (albeit the FINs themselves are under FA 2021 s 126 & Sch 34, extending HMRC’s existing third-party information powers under FA 2008 Sch 36).
HMRC wants more power, to:
HMRC wants to make sure that VAT compliance is included in the Gross Payment Status test, so that eligibility to be paid gross under CIS is withheld (or removed) where sub-contractors fall foul of their VAT obligations. Apparently, HMRC compliance staff have evidence of fraud involving Organised Criminal Groups. So, guess which obvious action HMRC wants to take – is it:
Well maybe it’s all three, but HMRC discussed only the last two options in its consultation. HMRC is keen to reassure that the automated check at (b) “would place no extra administrative burden on Gross Payment Status applicants or holders”, although one must wonder what the burden(s) might be like if the test were failed.
Now, the following admission from HMRC is simply stunning:
“Based on an analysis of the current Gross Payment Status population of sub-contractors compared to our records of VAT compliance, we estimate that approximately 16% of the active Gross Payment Status population would currently be non-compliant on VAT grounds if the test today was [were] changed today.
However, for almost all of these (approximately 15% of the total population), failure would be for issues that HMRC believe could be resolved by applicants simply complying with their obligations in a more timely manner.”
So, HMRC is happy to potentially nuke roughly one in six sub-contractors for failing to pay and file their VAT returns on time – but that is OK, because almost all of them would have passed if …they’d just paid and filed their VAT returns on time.
A couple of final points. HMRC’s Assessment of Impacts currently says that:
