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In his 2005 Pre-Budget Report, the Chancellor announced that HMRC would review its administrative rules and would develop and consult on new legislation bringing together the rules for the main taxes.
Much of the existing administrative legislation is old, complex and inconsistent. Two existing management acts, now 25 to 30 years old, have been inherited from the two former revenue departments and other provisions are scattered across a number of other taxes acts.
The approach adopted for the review is to focus on five core schemes covering the main taxes, namely:
- Value Added Tax
- Income Tax Self Assessment (including capital gains tax)
- Corporation Tax Self Assessment
- Pay As You Earn and National Insurance Contributions as operated by employers
- National Insurance Contributions paid by the self-employed (Class 2 and 4 contributions).
Together these schemes cover over 11 million taxpayers, of whom over half have income from businesses. They have overlapping populations, with many customers having to deal with HMRC in connection with two or more of the schemes. It is these customers who are most likely to have encountered differences and inconsistencies between the administrative rules for each type of tax.
The project looks across the five schemes rather than at each in isolation, identifying the common elements which offer the greatest opportunity for alignment. These common elements include:
- notification and registration
- returns and self assessment
- assessments
- claims
- payment and repayment
- appeals.
HMRC recognises that the five tax schemes are distinct and that alignment of the rules will not always be possible or desirable. A series of Questions and Answers on the project are available on HMRC's website.
Following on from a series of workshop consultations in February and March 2006, HMRC has now published draft clauses covering notification and registration, returns and assessments. These draft clauses rewrite the legislation telling taxpayers
- when they need to notify HMRC of their chargeability to income tax and corporation tax and when they must register for VAT.
- the rules requiring them to make the appropriate returns, and what those returns must include
- how HMRC makes assessments to collect tax.
HMRC stresses that these draft clauses are work in progress and welcomes views from interested parties during this consultation period that runs until 20 February 2007.
...UK Payroll News - Latest
Source:
Administration of Taxes - Draft Clauses - November 2006
Developing a New Management Act - commentary on the draft clauses
New Management Act - Questions and Answers
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