Government response to ‘Disputing Tax’ report issued by Treasury Sub-Committee
16 October 2019
The government has responded to the report that the Treasury’s Sub-Committee (TSC) released that offered 13 recommendations concerning how HMRC handles and solves tax disputes. These proposals are surmised below, along with the relevant response on the matter from the government. HMRC has either accepted or partially accepted each point which demonstrates how important consultations relating to policy are:
1.) Recommendation: HMRC should write to the Treasury Committee with an overview of the figures and nature of those involved with tax avoidance schemes, on an annual basis.
Response: Partially accepted. HMRC will publish further statistics and information relating to tax avoidance in a pledge to increase transparency on a yearly basis.
2.) Recommendation: HMRC should survey response times for providing settlement terms under the Contractor Loan Settlement Opportunity (CLSO) and report back on progress.
Response: Partially accepted. HMRC accepts that there have been delays in providing terms under the CLSO and did distribute additional resource to cope with the high response rates, meaning that 99% of affected individuals received their settlement figures by 31 August 2019. It has confirmed that nobody will be penalised due to any delays that have been caused by HMRC.
3.) Recommendation: HMRC should provide figures relating to the CLSO, how many people took it up and what the terms were, and the amount of tax and other duties applied.
Response: Accepted and figures were provided as follows –
-Approximately 50,000 taxpayers are affected by the loan charge.
-More than 28,000 scheme users were interested in tackling their tax affairs.
-Between 2016 & 2019, approximately 8,000 settlements have been agreed, equating to roughly £2 billion.
-There isn’t enough data to provide a figure for how many users of disguised remuneration did not settle.
4.) Recommendation: The government should report on how many individuals would not be pursued for participation in a loan-based scheme that had been fully disclosed for a ‘closed tax year’. The amount of money being written-off should also be provided.
Response: Accepted and the information will be provided on HMRC’s 2019-20 annual report.
5.) Recommendation: HMRC should work alongside professional bodies to ensure standards relating to conduct are transparent where advice on tax avoidance is being provided.
Response: Accepted – HMRC is actively working on methods to raise standards in the paid tax agent market, with emphasis on those who do not belong to any of the professional bodies bound by the Professional Conduct in Relation to Taxation (PCRT). The seven PCRT-owning bodies will review the PCRT, alongside HMRC in Autumn 2019.
6.) Recommendation: HMRC should devise a strategy for firms and advisers that actively encourages tax avoidance schemes.
Response: Accepted. Resources were doubled in this field for 2019-20. A refined strategy should be finalised by 31 March 2020 which will be published in due course.
7.) Recommendation: HMRC should justify the usage of bulk data such as the Common Reporting Standard (CRS). The recommendation is for the compilation of an annual report that demonstrates the issue of offshore non-compliance, identifying risks and how they will be addressed.
Response: Partially accepted. HMRC will publish data on the CRS in its annual report. There are already publications surrounding tax compliance, for example ‘Measuring tax gaps’. HMRC can’t publish all information due to international treaties which demand confidentiality.
8.) Recommendation: HMRC should ensure that regular contact is maintained with affected taxpayers through appropriate communication platforms. It should ensure that there are enough resources to deal with queries to ensure acceptable resolution times.
Response: Accepted. There is already a 12-year offshore assessing time limit in place and HMRC endeavours to remain in communication with taxpayers.
9.) Recommendation: HMRC should set out any powers and measures that need enhancing to deal with tax avoidance and evasion.
Response: Accepted. The legislation is consistently under review, with amendments to tax policy included in the Budget.
10.) Recommendation: HMRC should report back on progress made on work referenced in its No Safe Havens 2019 report. It should engage with professional bodies in the UK to promote UK tax advice.
Response: Accepted. HMRC continues to engage with professional bodies to ensure that tax advice is appropriately communicated.
11.) Recommendation: More should be done by HMRC in its approach to vulnerable taxpayers. HMRC should provide a definition of ‘vulnerable’ used to identify these individuals.
Response: Accepted. HMRC advisers are trained to identify key traits of vulnerability. There are Extra Support advisers in place to deal with vulnerable taxpayers. Ongoing research is taking place surrounding how HMRC can support its customers.
12.) Recommendation: HMRC to report on how it has received insights from advice bodies relating to difficulties faced by taxpayers who can’t afford to pay for advice.
Response: HMRC has been working with Voluntary and Community Sector organisations, who provide tax and benefit-related support to certain individuals, to tackle the issue at hand.
13.) Recommendation: HMRC needs to provide better quality guidance surrounding the workings of the tax system to vulnerable taxpayers.
Response: Accepted. HMRC acknowledges that improvements need to be made to the GOV.UK website. There are initiatives already in process to include more transparent advice online.
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