Compliance Checks - Consultation on HMRC's new approach to compliance checks

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17 January 2008

HMRC published a consultation document in May 2007 entitled "A new approach to compliance checks", with a view to improving its existing statutory powers to check that taxpayers have declared the correct amount of tax. Based on the feedback from that consultation and discussions with business representatives, professional bodies and accountancy firms, a further consultation document has been issued that seeks views on new proposals for reform.

The document takes a broad look at "compliance checks" and this term is used to describe all HMRC activities in this area, from assistance and education through to full-scale civil tax investigations. Such checks include, in the context of payroll, detailed Employer Compliance Reviews.

The main proposal is that there should be a common compliance checking structure for income tax (including PAYE), NICs, VAT, capital gains tax and corporation tax, with a possible future extension to other taxes. Key features of the new approach would be

• a more flexible approach involving a wide range of checks that is more geared to different taxpayer behaviours
  
  
• lighter touch checks for the majority of taxpayers who want to comply
  
  
• sufficient powers to enable the minority who deliberately understate their tax to be properly investigated
  
  
• greater clarity and consistency across taxes of the various rules and requirements
  
  
• for all these checks, very clear definitions of the powers and the circumstances in which they can be used, and more stringent safeguards to ensure that they are used appropriately.

Comments are invited on a wide range of proposals, which cover such areas as:

• whether taxpayers should keep precisely specified records or only records that are appropriate to them
  
  
• whether there are any existing record-keeping requirements that could be removed or changed
  
  
• whether existing retention periods should be reduced
  
  
• how the inherent costs of record-keeping could be reduced
  
  
• the extent of HMRC's powers to see non-business tax records, and to see business tax records at business premises
  
  
• how time limits for HMRC assessments and taxpayer claims might be aligned
  
  
• what deterrents would be appropriate to ensure information can be obtained from non-compliant taxpayers.

The document also includes draft guidance on record keeping and draft Codes of Practice on compliance checks, all of which are open for comments.

Comments on the proposals are invited by 6 March 2008. Instructions for sending comments are given in the consultation document.

...UK Payroll News - Latest

Further information:
A New Approach to Compliance Checks: Responses to Consultation and Proposals

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