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Whatever happened to the Taxpayer's Charter?
Not a question that has received a great deal of debate in the past few years; does it rank alongside 'whatever happened to the Cones Hotline?' and, now I think about it, 'do you remember the Citizen's Charter?'
I was reminded of the latter when an Internet search led me to the Cabinet Office. When I asked to speak to someone about the Citizen's Charter the telephonist said that she could put me through to the right person.
The phone rang for a minute or so and was then answered. When I repeated my enquiry on the Charter, the gentleman confessed that he had only answered the telephone because he was passing along the corridor and had heard it ringing.
Should anyone be looking for office space conveniently located in central London, I understand that Room GO1 in the government offices at 10 Great George Street is currently vacant and has a working telephone line.
I must say that the passer-by was helpful and he did give me the press office number. The lady there said that she recalled this as something relating to 'the Major years' and suggested I call the Number 10 press office. At this point one tends to see why these subjects do not generate a lot of discussion. I admit that I gave up then; after all, I have a life to lead and a salary to earn!
The Taxpayer's Charter
However, issues relating to taxpayers are perhaps nearer to our hearts and the Chartered Institute of Taxation has called for a Taxpayer's Charter and believes that it is very important for this issue to be explored thoroughly. This was reflected at the CIOT's Tax Debate on CTA Day (Tuesday, 13 September).
Unfortunately, I had a somewhat similar bizarre experience in my researches on this 'charter'. Perhaps I should have known better, but I went back to the Cabinet Office website where there is a list of National Charters (http://archive.cabinetoffice.gov.uk/servicefirst/index/list.htm).
Following the link 'Tax, VAT and National Insurance', takes one to 'Inland Revenue: Charter For Inland Revenue Taxpayers'. Following that link takes one to a note that this was last revised in September 2000, that it covers the UK and is 'Available Online'.
Clicking on that final link leads one to a page (www.hmrc.gov.uk/pdfs/ir167.htm) that states 'Sorry but the page you are trying to reach cannot be found'.
Of course, the reason for this is that the reference to IR167, the Taxpayer's Charter leaflet (or, as explained by David Brodie in 'Farewell to the Taxpayer's Charter' in Taxation, 13 April 2000, the replacement to the original charter) now actually languishes on the HMRC website page, www.hmrc.gov.uk/leaflets/obsolete.htm, under the heading of 'Withdrawn Leaflets'.
Perhaps this is the HMRC equivalent of Room GO1; or should that be 'Room 101'?
Those who hark back to the happy days of the Taxpayer's Charter will have to dig around at the back of their filing cabinets to find one, because a copy is no longer available on the HMRC site as a comparative record. There is simply a note that this has been replaced by 'Customer Service Standards'.
The customer standards can be found at www.hmrc.gov.uk/servicestandards/standards.htm and are a rather different kettle of fish from the charter and basically measure certain performance criteria against targets. HMRC state that: 'we do have a mission statement as below [see next page]. However, it is too early to say whether HMRC will be having a new HMRC taxpayer/customer charter'.
The latest developments
Philip Baker QC is taking an active interest in this subject and articles by him have appeared in Legal Week ('The Bar: taxpayer safeguards', 7 July 2005) and The Guardian ('Tax experts call for a bill of rights', 2 July 2005).
Philip is sure that there is a need for a Taxpayer's Bill of Rights or Charter. In fact, it does seem rather odd that — having originally been in the forefront of thinking in this regard, with the Inland Revenue having produced its original Taxpayer's Charter in 1986 — HMRC should now appear to be dragging their feet, especially when Customs had (or have) two charters (the Notice 400: 'HM Customs and Excise Charter' and the 'Travellers' Charter') and there is also the leaflet CA47: 'Charter for National Insurance contributors'.
Philip points out that many countries throughout the world have such documents, with, for example, the United States having these at various levels of government.
There is a Taxpayer Bill of Rights 2 at federal level, with 43 of the 50 states also having a bill or charter and it is even normal for local communities that have tax raising powers to have these. When interviewed, he mentioned that he had a copy of the charter from the town of Normal, Illinois.
Other national tax figures such as Anne Redston and John Whiting have also recently called for a Taxpayer's Charter and international impetus has been given with the OECD's updated report on the subject in 2003 (see www.oecd.org/dataoecd/24/52/17851176.pdf).
The introduction to the suggested Taxpayer's Charter contained in the OECD 2003 Report reads as follows.
'In our society our tax laws require that we pay taxes and other charges in order to fund a range of government programs and community services, such as education, welfare, health, defence, law enforcement and transportation infrastructure, that help our society to function.
Your tax administration, in collecting these taxes and charges, operates on the fundamental principle that citizens and non-resident taxpayers will act in accordance with the law when they are treated with respect and fairness and provided with all the information, advice, assistance and other services they need to comply with their obligations.
This Taxpayer Charter broadly summarises your important rights and obligations under the tax system. We have published it to help set in place the co-operative relationship we seek with the community — one based on mutual trust and respect.'
HMRC — Mission Statement
'To provide an increasingly efficient and high quality service that:
- helps people and businesses understand and meet their tax obligations and understand and receive their entitlements,
- strengthens frontier protection,
- tackles those who do not comply,
so we all contribute to the integrity and well-being of the UK.'
Rights and obligations
Table 2 summarises the rights and obligations contained in the OECD Charter. The fact that the obligations have been paraphrased to fit the page in this article should not be taken as meaning that these are any less important in the relationship between the Revenue authorities and its taxpaying customers.
Philip Baker QC believes that the issue is not whether there should be a charter; the main decision is the exact nature of it.
A bill of rights would be enshrined in law, but Philip notes that, constitutionally, this is not a UK tradition. It is more likely that the eventual rights will be enshrined in a charter. The next issue would be the rights and terms of this charter; if it is too 'wishy-washy' it will not be taken seriously.
HMRC must prove that the charter is not simply aspirational, but that it contains more precise commitments that are legally binding. And will the charter just include rights or will it combine rights and obligations?
Philip has prepared a summary of the rights that are usually guaranteed in a taxpayer's charter or bill of rights and these are shown in Table 1 below.
Table 1. Taxpayer's Bill of Rights or Taxpayer's Charter
These documents generally guarantee the following rights.
1. General service-delivery commitments. Most contain general commitments that the revenue authority's services will be delivered with courtesy, in a fair and impartial fashion, promptly, and in a professional fashion. Some Taxpayer' Bill of Rights ( TaBoRs) and Taxpayers' Charters (TaChs) go somewhat further by setting out specific commitments — for example, to reply to most correspondence within a certain number of days.
2. Help and assistance. Most documents commit the revenue authority to provide help in various forms — drop-in centres, call centres, and leaflets — and specific assistance to taxpayers. Some contain specific commitments to producing tax returns in clear, simple language and in foreign languages for different communities. A number of the documents specifically contain the right to rely upon guidance given by the revenue authorities in response to a specific request, though only if the guidance is given in writing.
3. Confidentiality. Most of the documents specifically guarantee confidentiality of taxpayer information; some explain the limited circumstances where information may be supplied to other authorities.
4. Representation. Most of the documents allow a taxpayer to be represented before the revenue authorities either personally or through an agent of the taxpayer's choice. Some of the instruments also set out the rights (and sometimes the obligations) enjoyed (or imposed on) taxpayers' agents.
5. Review and appeals. Nearly all of these documents mention the right of the taxpayer to have decisions of the revenue authorities reviewed or appealed to independent tribunals. These statements generally add nothing to the existing rights at law, but they do
no harm.
6. Rights during investigations. These documents are sometimes quite detailed on the rights which taxpayers have during investigations. They may include a right to be given an explanation why an investigation has been opened, a right to (say) 30 days' notice before any visit by the revenue authorities; a right to have the taxpayer's agent present at any meeting and to record that meeting; a right to adjourn the meeting at any time; a right, at the end of the investigation, to a copy of the investigator's report and any working papers.
7. Enforcement of tax liabilities. Virtually all of the documents in other countries deal with this and mention rights such as the right to ask for an instalment agreement where the taxpayer cannot presently pay the tax. Often there are also specific guarantees that the taxpayer will be given notice before any enforcement action — like seizure of goods — is carried out, and certain property (such as tools used in a business) will not be seized.
8. Prompt reimbursements and refunds. Most documents guarantee the refund of overpaid taxes and penalties, generally with interest.
9. Further rights. Some TaBoRs and TaChs contain further specific rights in addition to those commonly found in these documents. In the United States, for example, a number of the state-level documents guarantee that no official of the revenue authority will be promoted or have his salary determined on the basis of additional tax recovered as a result of investigations. Many of the documents contain a guarantee that the taxpayer is entitled to expect his statements to be believed and that he will be regarded as acting honestly unless and until the revenue authority has evidence to the contrary. A few documents expressly recognise that the taxpayer has a right so to arrange his affairs to pay the minimum amount of tax, provided that he acts lawfully in so doing.
Customer service
HMRC is presumably as keen as the old Inland Revenue was for us all to be seen as its 'customers'. I remember someone giving me some business advice, which I think remains true: 'people like to do business with people they like'. I was reminded of this in my search for information on the Taxpayer's Charter, etc on the HMRC website.
There was a leaflet IR120, 'You and the Inland Revenue', which the HMRC Personal Contact Manual (at PCM1.6) refers to and which 'contains advice for taxpayers making representations if they are not satisfied with our service'. The manual states that 'the text of IR120 is reproduced on the next page'; you will probably not need me to tell you that the next page is blank.
But one does wonder about HMRC's commitment to its customers when their advice to staff on avoiding criticism or complaint when making personal contact with the public is to 'ensure that personal contact is necessary'. It seems to me that they are suggesting that the best way to avoid criticism is by avoiding contact with their own customers.
'Two 99s and a Cornetto, please'
This subheading was apparently one of the favourite 'one-liners' of callers to 'The Cones Hotline'. The question of a new Taxpayer's Charter or a Taxpayer's Bill of Rights certainly deserves a much higher standard of debate and discussion.
The Times, 8 September, reported that the Child Support Agency is refusing to publish information that would allow its performance to be judged. Presumably, rumours that HMRC might be willing to take over CSA functions would not lead it to imitate such action, but a binding
Taxpayer's Charter should ensure clarity and open government.
One hopes that HMRC will take on board the comments of the tax experts such as Philip Baker QC, the Chartered Institute of Taxation and other professional bodies on this subject. A binding commitment to rights and obligations must surely be in the long-term interests of everyone involved in the country's tax system.
And rather than directing enquiries to empty rooms and blank website pages, let us hope that the Government and HMRC actively engage in discussions on this subject.
Table 2. The Taxpayer's Charter (from the OECD's 2003 Report)
Your rights
Your right to be informed, assisted and heard
We will treat you with courtesy and consideration at all times and will, in normal circumstances, strive to:
- help you to understand and meet your tax obligations;
- explain to you the reasons for decisions made by us concerning your affairs;
- finalise refund requests [within … days]/[as quickly as possible] and, where the law allows, pay you interest on the amount;
- reply to written enquiries [within … days]/[as quickly as possible];
- deal with urgent requests as quickly as possible;
- answer your telephone call promptly;
- return your telephone call as quickly as possible;
- keep your costs in complying with the law to a minimum;
- give you the opportunity to have your certified legal or taxation adviser present during any investigation;
- send you, by the end of the investigation or [within … days of]/[as quickly as possible after] its completion, the relevant minutes or a written advice of the result of that investigation and the reasons for the decisions we have taken;
- send you, where an assessment has been issued, details of how the assessment was calculated.
Your right of appeal
We will, in normal circumstances, strive to:
- fully explain your rights of review, objection and appeal if you are unsure of them or need clarification;
- review your case if you believe that we have misinterpreted the facts, applied the law incorrectly or not handled your affairs properly;
- ensure that the review is completed in a comprehensive, professional and impartial manner by a representative who has not been involved in the original decision;
- determine your objection [within … days]/[as quickly as possible] unless we require more information to do so, or the issues are unusually complex;
- give you reasons if your objection has been completely or partially disallowed;
- request further information from you only where it is necessary to resolve the issues in dispute.
Your right to pay no more than the correct tax
We will act with integrity and impartiality in all our dealings with you, so that you pay only the tax legally due and that all credits, benefits, refunds and other entitlements are properly applied.
Your right to certainty
We will, in normal circumstances, strive to:
- provide you with advice about the tax implications of your actions; let you know [at least … days]/[as soon as possible] before the conduct of an interview or a request for the production of documents;
- advise you of the scope of an interview and our requirements;
- arrange a suitable time and place for the interview and allow you time to prepare your records.
Your right to privacy
We will only make enquiries about you when required to check that you have complied with your obligations; only seek access to information relevant to our enquiries; treat any information obtained, received or held by us as private.
Your right to confidentiality and secrecy
We will not use or divulge any personal or financial information about you unless you have authorised us in writing to do so or in situations where permitted by law; only permit those employees within the administration who are authorised by law and require your personal or financial information to administer our programs and legislation, to access your information.
Your obligations
To be honest
The taxpayer is expected to provide complete and accurate information as and when required; declare all assessable income on a return; claim only deductions, rebates and credits to which you are entitled; answer questions completely, accurately and honestly; explain the full facts and circumstances when you seek tax advice or when you request a private ruling.
To be co-operative
The taxpayer is expected to co-operate with tax administrators and treat them with courtesy and respect.
To provide accurate information and documents on time
The taxpayer is expected to file correct returns and documents within time limits; provide complete and accurate information by certain dates; take reasonable care in preparing returns, etc.; advise of relevant events such as incorporation, new businesses, address changes, etc.
To keep records
We expect you to take reasonable care in preparing and retaining keeping sufficient records and books to enable you to meet your tax obligations and to allow access to these to enable the tax obligations to be checked
To pay taxes on time
The taxpayer is expected to pay the full amount of your taxes by the due dates; pay the full amount of any balance outstanding resulting from assessment or reassessment; help us develop a mutually acceptable payment arrangement if you cannot pay any outstanding balance in full and have exhausted all reasonable possibilities of obtaining the necessary funds by borrowing or re-arranging your financial affairs; withhold and remit by due dates all taxes withheld or collected on behalf of others; advise us as soon as practical if some event beyond your control has affected your ability to pay your taxes on time so that appropriate arrangements can be put into place to assist you.
Risks of non-compliance with the obligations
If you do not meet your tax obligations the law may provide for penalties and/or interest to be imposed; prosecution action may be taken in more serious cases.
