Interesting News

Revenue investigations

If you have ever had to face a tax enquiry you will know how stressful it can be – in terms of time and money, quite apart from general frustration at how long it takes to resolve everything.

Presumably because of resource issues, HMRC are steadily introducing new, streamlined ways of checking tax returns and accounts. They have a number of initiatives already underway or planned for introduction in 2010 to make compliance checks less costly and stressful for businesses:

High Volume Intervention
This deals with small and isolated mistakes requiring simple correction, by processing the errors quickly by letter or telephone without access to business records or a visit to business premises.

External Communication
HMRC are redrafting many of their letter templates to use clearer language and explanations, a neutral tone and a more logical structure. The new letters are said to be easier to understand and will help to reduce customer uncertainty and the level of support businesses need to comply with HMRC requests. This seems to be an admission that the current letters are unnecessarily provocative and adversarial in approach.

Openness and Early Dialogue principles
HMRC aim to talk to businesses at the start of a compliance check, explain why they are checking and what that check will involve. By building an open and collaborative relationship in this way, checks can be concluded sooner with reduced costs for the customer.

Compliance Process Re-engineering.
HMRC are undertaking structured reviews of the traditional methods of carrying out compliance checks with the aim of cutting out waste for both them and the customer. A review of Employer Compliance processes has been completed and pilot activity is being analysed, prior to adoption. VAT and Income Tax Self Assessment re-engineering is now underway.

All these initiatives are laudable provided an individual tax officer does not attempt to take unfair advantage of them by, for example, seeking additional tax where none is due.