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YOUR MISSION, SHOULD you choose to accept it, is to persuade the Treasury and HMRC to publish a 'Taxpayers' Charter'. Forget double agents, deadly biological weapons, rogue arms dealers and Tom Cruise for a moment, this time we are going to deal with some real problems that the taxpayer in the street can identify with, dealing with their tax obligations, understanding their rights and responsibilities towards HMRC and ensuring, in turn, that the department acts with integrity and impartiality towards them and their clients. In fact, now I take a closer look at recent developments, have I stumbled on the tax profession's very own 'mission impossible team'. Last year, in 'A taxpayer's new charter?' (Taxation, 15 September 2005), I mentioned that Philip Baker QC had been taking an active interest in this subject and had written articles in Legal Week and The Guardian. Since then, the heat was turned up when Stephen Williams MP (the only Chartered Tax Adviser in the House of Commons) tabled an early day motion (below) calling for this subject — a taxpayers' charter rather than a taxpayers' mission impossible team — to be debated.
The parliamentary website explains that an 'early day motion (EDM) is a colloquial term for a notice of motion given by a Member for which no date has been fixed for debate. EDMs exist to allow Members to put on record their opinion on a subject and canvass support for it from fellow Members. In effect, the primary function of an EDM is to form a kind of petition that MPs can sign (and at the time of writing this one has attracted 35 signatures) and there is very little prospect of these motions being debated on the floor of the House'.
I have heard early day motions described as 'parliamentary graffiti'; they flag up that there is an issue of concern (although I see that congratulations to Chelsea for winning the premiership also fall under that heading), which MPs believe that the Government should be considering.
Early day motion |
| That this House believes that the fair and effective financing of public services in today's world requires a clear understanding by taxpayers and tax administration alike of their respective rights and responsibilities and is concerned that the clear vision of these may be obscured by the complexity of much tax management legislation; notes that, prior to the merger into HM Revenue and Customs, both the Inland Revenue and Customs and Excise had Taxpayers' Charters but that with the merger the status of these is unclear and that they have not been reviewed for many years, meaning less protection for the taxpayer; further notes that in the meantime the use of Charters and Bills of Rights to confirm and codify taxpayers' rights and responsibilities and build support for a co-operative relationship between taxpayers and tax administration has developed extensively in many countries; and calls for a set of principles expressed in legislation or a Taxpayers' Charter to set down the rights and obligations of the taxpayer and the tax administration under the Finance Act requiring the Commissioner of Revenue and Customs to bring forward a proposed Charter for ratification by the House. |
Best practice
Stephen Williams, the Liberal Democrat MP for Bristol West, was a tax consultant and local councillor before being elected to Parliament in 2005. Having had many years' experience in dealing with tax affairs, Stephen continued his interest in tax-related matters following election.
'An early day motion was a way to raise this issue in Parliament, which other MPs could sign up to. Whilst it would not bring forward a government response by itself, there was the possibility that it could lead to an adjournment debate or parliamentary questions'.
The Inland Revenue previously had a taxpayer's charter before allowing this to lapse, Stephen believes that there is no reason why the administration of the tax system in the UK should not stand alongside the best practice in the world by incorporating a charter within it. But will it make a difference? Stephen firmly believes that it will, but subject to the proviso that 'to be meaningful, it needs to have teeth, with sanctions and methods of redress when HMRC does not uphold the charter standards'.
Stephen believes that the need for a charter will be especially enhanced if the Government proceeds with its plans to bring forward the tax return filing deadline dates. This is likely to put taxpayers under more pressure to complete their returns, which in turn is likely to increase the number of mistakes made. HMRC will need to have a policy to deal with such instances in an understanding way that does not alienate people from the tax process. The department appears to recognise the potential dichotomy here as their latest (2006) consultation document, HMRC and the Taxpayer: Modernising powers, deterrents and safeguards, notes the aim 'to support those who seek to be compliant, but come down hard on those who seek to gain an unfair advantage through non-compliance' (www.hmrc.gov.uk/about/powers-appeal.htm).
The document goes on to state that 'safeguards exist to ensure that taxpayers are treated fairly and in accordance with the law' and that powers are applied reasonably and fairly (6.1).
The response
Perhaps not unexpectedly, the response from the HM Treasury Team on this subject has been a deafening silence; it appears that the Treasury sees no need for a charter, which perhaps reinforces Stephen's previously published view of Dawn Primarolo as 'Madame Non'.
HMRC also appear to be not overly enthusiastic. In the above-mentioned consultation document, they acknowledge that some responses to the consultation on powers, deterrents and safeguards launched in 2005 suggested the reintroduction of a taxpayers' charter. The document considers two options.
- 'Do nothing. HMRC has set up units to understand and promote the taxpayer's perspective (for individuals, small and medium enterprises and employers, large businesses and employers and frontiers work). Their aim is to gain a greater understanding from taxpayers themselves of the issues and needs of particular groups. This understanding may mean that further clarification of HMRC's relationship with taxpayers through a taxpayer's charter or compact is not needed.
- 'Establish some sort of “compact” with taxpayers and/or their professional advisers. Since the previous consultation, thinking outside HMRC has started to extend beyond charters towards the possibility of such a compact. This might set out the respective roles and responsibilities of HMRC, citizens, businesses and their advisers. The review will work with HMRC's Customer Units and seek views from outside the department in deciding what is the right approach to publicising and committing to rights and obligations.'
HMRC does have a 'mission statement' (below), but this tends to be tucked away in other documents, rather than featuring prominently on the HMRC website or elsewhere.
John Whiting gave his thoughts on the HMRC's consultation document.
'This is a welcome document, showing how the thinking is going on this important review with proper time to discuss the issues it contains.
'The exposition of principles are important — simple enough to say that the powers should be easily understood, used consistently, clear and publicised, etc. but these things need to be laid down and adhered to. The hints (paras 4.2 and 3) about a taxpayers' charter or bill of rights are welcome — a good way of enshrining the principles for the protection of both sides.
'It's good to see that (at para 4.17) there is acceptance of the principle that the taxpayer should not be penalised for simple mistakes where they have taken reasonable care to comply — our tax system is complex and taxpayers have a significant administrative burden to shoulder.
'Some of the non-compliance aspects need discussion — for example the idea of penalties for non-disclosure of an “unreasonable tax position”. Non-disclosure or misrepresentation of the facts as such cannot be condoned but an “unreasonable tax position” needs to be a balanced evaluation — not just HMRC's view of unreasonable.
'There is much to discuss in the coming months — including the issue of access to advisers' papers which should be part of this review.'
But will the hints on the charter come to fruition? One gets the impression that HMRC have no plans to come up with a charter or compact at anytime in the near future. Chapter 7, 'Programme of work' in the latest consultation document lists 'Safeguards: continue to review the full range and consider extending as appropriate' as the last of seven work areas. Is this significant?
HMRC mission statement |
| Our mission is to provide an increasingly efficient and high quality service that: |
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| so we all contribute to the integrity and well-being of the UK. |
| Our Values are: |
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Any more help
On 9 May 2006, John Cullinane took over as president of The Chartered Institute of Taxation. In addition to pressing for 'the return of the rule of law to the tax system' he has also joined 'the team' by campaigning for a taxpayers' charter. John's targeting of back-dated tax rules, legislation introduced without consultation and the lack of scrutiny of tax measures matches in with Stephen's earlier suggestion to Parliament in the course of discussions of the Finance Bill 2005 of a 'tax commission' that would scrutinise and advise on proposed legislation. As Stephen said, 'there is a need for some standing commission to examine tax law as it accumulates with every Finance Bill'.
What can you do?
Tax advisers are currently very concerned with the proposals to advance the self assessment tax return filing deadlines, which have the potential to impact greatly on the running of their practices. However, this should perhaps not distract them from HMRC's current consultation — which ends on 26 June 2006 — and the part that a taxpayers' charter could play in it. Whilst this may not seem to be of such an immediate effect, this does have the potential to impact on both practitioners and the taxpaying (and tax-credit-receiving) public.
Can I suggest that practitioners take a few minutes during their next coffee break to at least glance through the consultation document? They can navigate to this article on the Taxation website (free to subscribers) and this will provide a link to the consultation at www.hmrc.gov.uk/about/powers-appeal.htm. Comments by practitioners — and their clients — in support of a taxpayers' charter can be sent by e-mail to: Angela.Shore@hmrc.gsi.gov.uk (again there will be a live link on the Taxation magazine website) or by post to: 'HMRC and the Taxpayer', Room 1C/03, 1st Floor, 100 Parliament Street, London SW1A 2BQ (fax: 020 7147 2460).
In the 'Mission Impossible' series, the tape outlining the team's mission usually self-destructs. Don't let any thoughts that you might have on this subject fizzle out in the same way; if we all act as part of the 'team', it may be 'mission accomplished!'
