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HMRC are carrying out trials of a single compliance process for enquiries across a range of different taxes. The new process will focus on the risks and behaviours identified in cases and throughout the life of the compliance check, irrespective of the type of tax.
It will comprise four different levels of intensity:
- The first level will provide a new approach to working cases remotely, as the department does currently with income tax self assessment and corporation tax aspect cases and VAT pre-credibility desk clearance cases.
- The second level will look at a simplified and faster route for those cases where there are not many risks, but a face to face intervention approach is required: similar to VAT assurance or employer compliance visits.
- The third level will address cases showing more in depth risks and address behaviours short of evasion.
- The fourth level will tackle cases indicating evasion characteristics.
The Revenue says the intention is that as a case is worked, it should be able to move between each of the four levels, depending on what is encountered. This will avoid any perceived ‘fishing expeditions’ and will help to reduce the emotional burden to the taxpayer, in that the check will only take as long as the risks or behaviours dictate.
The trials of the new process will run for six months from 1 June in ten different locations across the UK: Reading/Slough, Newcastle, Warrington, York, Exeter, London Euston and Southampton in England; Cardiff in Wales; Belfast and Edinburgh/Dundee.
The new process will be rolled out nationally from January 2012, subject to the results of the trials.
Baker Tilly’s Mike Down expressed concerns about the mooted process, saying, ‘From the detail provided by HMRC it is difficult at this stage to see how the new framework will work in practice. As with the business records checks pilot, businesses will be unsure if and how this will affect them.
‘They may also be concerned that the Revenue is planning to turn up on their doorstep, demanding immediate sight of all records. This should not be the case, because the department must give seven days advance warning of any visit, unless fraud is suspected.’
It is unclear at this stage what HMRC’s intention is in introducing this new framework, added Mr Down, who said he would like ‘further clarification so that businesses understand the purpose and aim of this new approach’.
