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The debate about whether we should have a taxpayers' charter in this country has moved on: it is no longer a question of whether we should have such a charter, but rather when, what its form and contents should be, and what should be its legal effect.
Just to recap: a taxpayers' charter (by whatever name the final document is called) is a statement of the rights (and sometimes duties) of taxpayers when dealing with the revenue authorities.
The former Inland Revenue had a charter of sorts, but it appears to have wasted away even before the merger with Customs and Excise to form HM Revenue and Customs.
The OECD (which is the leading international body in the field of taxation) has advised its member countries to adopt taxpayers' charters, and many have done so. It is understood that every submission made in response to the March 2006 consultative document on Revenue Powers (www.hmrc.gov.uk/about/powers-appeal.htm), which considered this issue supported the adoption of a taxpayers' charter.
With such clear calls for the adoption of a charter, it is time to move on and begin to focus on the content and form that the UK taxpayers' charter should take.
The starting point: substance
Several background points might be made at the outset.
First, the scope of activities of HMRC is so broad that no single document could possibly cover all the rights (and possibly duties as well) of the so-called 'customers' of the department.
Clearly there will need to be separate documents dealing with the rights of taxpayers (in the strict sense) as opposed to the rights of, say, recipients of tax credits or the rights of travellers passing through border security.
Secondly, it is now clear that a wishy-washy, aspirational, 'services level' charter — like that previously adopted by the Inland Revenue — will no longer fill the perceived need.
Around the world, this issue has developed away from merely an expression of aspirations as to the level of service which a taxpayer may expect from the revenue authorities ('we try to answer the telephone within ten rings' will not suffice).
Thirdly, a taxpayers' charter is no substitute for having the rights of taxpayers enshrined in statute. Rights of appeal, time limits, protection against disclosure of confidential information or legal advice, etc., should always be given proper statutory form.
However, there are certain more general and broader rights for which a charter is the more suitable instrument. (For example, the taxpayer has the right to be believed in anything he tells the revenue authorities unless there is evidence that what he is saying is not true; the revenue authorities should collect the right amount of tax, not necessarily the maximum amount of tax which could be levied; taxpayers have the right to be represented at a meeting with the revenue authorities by a person of their choice.)
There is a role for taxpayers' charters alongside statutory guarantees.
Fourthly, there is some support for a charter covering not just the rights of taxpayers, but their duties as well. Obviously, most of the duties of taxpayers will be set out in tax legislation; however, it may do no harm if broad statements of some duties were in a straightforward, accessible document like a charter.
(For example, the duties that a taxpayer should keep adequate records to prove his tax liability and keep them for a reasonable period of time; and that he should notify the revenue authorities of any significant change in circumstances which might affect his tax liability.)
Form
Turning to the exact form that a taxpayers' charter might take, there are at the moment at least two patterns that are found in many other countries.
However, it is suggested below that the UK might develop a third pattern which may be more appropriate to the administration of the tax system in this country.
On the one hand, many other states have a taxpayers' charter in the true sense: that is, there is a statement of taxpayers' rights that are issued, declared and guaranteed by the revenue authorities themselves.
As an example, a large number of the individual federal states making up the United States (which have significant, local tax-raising powers) have a similar declaration issued by the local commissioner of taxes or the local board of taxation.
On the other hand, some overseas countries follow the pattern of a taxpayers' bill of rights: that is, usually, a separate chapter contained in the local tax legislation, which guarantees the rights of taxpayers.
Again, several of the states in the United States of America have enacted their own taxpayers' bills of rights; at the federal level there is also a taxpayers' bill of rights enacted by Congress.
Tempting as it is to start to dream of Finance Act 2007, Schedule 1 being headed 'The United Kingdom Taxpayers' Bill of Rights', one doubts whether that is necessarily the best approach to adopt in this country. If a taxpayers' bill of rights is enshrined in statute, it is likely to be drafted in rather cautious, legal language, with more than a smattering of input from the Parliamentary draftsman.
A cautious approach to drafting might set in, and subsequent changes to the taxpayers' bill of rights would then have to be by amending legislation.
Close comparisons
If one looks at home, but in other areas of UK administrative practice for a pattern to follow, then interestingly there are a large number of precedents.
The past 30 or 40 years have seen a massive growth in a type of 'soft' law, in the form of 'codes of conduct' or 'codes of practice' for different administrative officers, administrative agencies or other public bodies.
Immigration officers, the police, the security services and local councils all have their codes of practice or codes of conduct. With some adjustment, these might form a pattern which is more in keeping with UK administrative practice.
HMRC already uses the term 'code of practice' (for example, Code of Practice 9 — or 'COP 9' to its few friends — dealing with civil investigations of fraud).
The proposed charters would be of a totally different nature, and it would be necessary to use a different title for these new declarations of rights (and duties), even if the precedent of codes of conduct/codes of practice in other administrative areas is followed. Clearly, there seems to be some support for calling these new documents 'taxpayers' charters' (where that term is appropriate — not for tax credit recipients, for example).
The codes of conduct/codes of practice applicable to other administrative officers or administrative bodies take a wide variety of forms. Many of them are issued in accordance with specific statutory provisions which set down the process through which the code is to be adopted, and the legal effect that the code has.
There is no reason why Finance Act 2007 should not contain provisions dealing with the drafting, promulgation and legal effect of these new taxpayers' charters.
Some of the administrative codes of practice in other areas are issued by the Secretary of State concerned; others are issued by an independent body set up specifically for the purpose.
Many of the statutory provisions require that a draft code of practice has to be laid before the two Houses of Parliament before it is adopted. Some of the statutory provisions require extensive consultation with interested parties before the draft is prepared and laid before Parliament.
There is much to be said for a provision in the Finance Act 2007 requiring the relevant Minister in the Treasury (presumably the Paymaster General) to consult with a range of bodies representing the interests of taxpayers before drafting and then presenting one or more taxpayers' charters to the two Houses of Parliament. Perhaps a consultative committee should keep the charters under review and propose any needed amendments.
Legal effects
There is also a wide variation in the legal effect which is given to the codes of practice that apply to other administrative officers or administrative bodies. At one extreme, the statutory power to issue the code may be silent about its legal effects; at the other extreme,breach of the code by an administrative officer may be a disciplinary matter or potentially give rise to civil or criminal liability.
The legal effect of taxpayers' charters may have to depend upon whether they are simply charters of taxpayers' rights, or also include taxpayers' duties.
Focusing on declarations of taxpayers' rights, one approach would simply be to require that all officers of HMRC should take into account the taxpayers' charters in carrying out their duties.
Slightly more forceful than that, the requirement to observe the relevant taxpayers' charters could be included in the contract of employment of each officer of HMRC or in an oath taken on appointment.
More forceful still, deliberate failure to apply a relevant provision in a taxpayers' charter could be a disciplinary matter for the officer concerned.
Activities of HMRC are subject to review by an independent adjudicator, and it would clearly be appropriate for the adjudicator to take the provisions of any relevant taxpayers' charter into account in assessing the handling of a case.
The strongest solution by far, in terms of protecting rights (and encouraging the observance of duties), would be for the legislation under which taxpayers' charters are adopted to state that any tribunal or court hearing, that is exercising judgment over an appeal against a tax assessment, should take into account any relevant provision contained in a taxpayers' charter.
That might also extend to the situation where the charter included not just the rights, but also the duties of a taxpayer: a taxpayer who failed to observe the basic duties set out (hopefully very clearly) in the taxpayers' charter should be aware that the appeal commissioners might take that into account when hearing the taxpayer's appeal.
Moving onwards
There is an old civil service maxim that nothing should ever be done for the first time. In the field of codes of conduct/codes of practice for administrative officers and bodies, there is a wide range of UK precedents to follow.
At the very least, these precedents should be considered when it comes to the adoption of a format for the UK taxpayers' charters.
The debate around taxpayers' charters has moved on. It is time to stop discussing whether we need a new charter. It is time to consider the form and content of these charters, with a view to proceeding with them with some urgency.
With annual access to the Parliamentary process, the revenue authorities have little excuse for not proceeding speedily on this course.
It might perhaps be Gordon Brown's swan-song as Chancellor (before he moves on to greater challenges) to announce in Budget 2007 the inclusion in the Finance Bill of procedures for the adoption of Taxpayers' Charters of Rights (and Duties).
Philip Baker QC, CTA is a barrister at Gray's Inn Chambers.
Other comments We approached other interested parties for their current thoughts on a taxpayers' charter. HMRC stated that: John Cullinane of The Chartered Institute of Taxation gave us his thoughts:
