Calls for HMRC tax rules and processes to be simplified

HMRC has been urged to simplify tax rules and processes as a result of its call for evidence on its Tax Administration Framework Review.

The Chartered Institute of Taxation (CIOT) has responded to the review, saying that the current ‘misalignment of powers, penalties and processes across different tax regimes creates confusion and makes it harder for taxpayers to comply with their tax obligations and for HMRC to administer the system.’

The CIOT has recommended:

• Re-evaluating HMRC’s enquiry powers for Income Tax Self-Assessment (ITSA) and Corporation Tax Self-Assessment (CTSA) to align them with powers that have a statutory time limit, similar to those in VAT and PAYE systems.
• Preserving shorter assessment time limits for non-deliberate behaviour and ensuring consistent application across all taxes and National Insurance Contributions.
• Aligning penalties across all tax regimes including those for late filing, late payment and errors, to make the penalties regime simpler with fewer different types of penalties.

• Aligning appeals processes to help mitigate the confusion and misunderstandings that different rules, terminology and procedures currently create.
• Creating a new Taxes Management Act so that all tax administration legislation is kept together and is easy to find and follow.

Margaret Curran, CIOT Technical Officer, commented, “It is crucial that taxpayers and the public have trust in the tax system when it comes to how HMRC exercise their powers and impose sanctions, and how taxpayer protections and safeguards operate. The way HMRC use their powers and operate safeguards under a reformed tax administration framework must be effectively monitored and subjected to appropriate oversight.

“We encourage HMRC to be bold enough to implement real simplification and change in these areas and we look forward to being involved in further consultation as their review progresses.”

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