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Is there a new confidence about HMRC, Simon Sweetman asks?

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27th Apr 2009
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In one of his Budget commentaries, Simon Sweetmans asks "Is there a new confidence about HMRC, now that the new powers and penalties are in place ?" Read on.

Looking at the Budget proposals put together under the head of “compliance” there are some indications that this may be the case. Quite clearly, too, there is now a connection in the public mind between massive earnings in the financial sector, that sector’s clear incompetence, and major tax avoidance. There are a few comments of the “good luck to ‘em” sort, but not many, and when PWC moans about making the UK a “less attractive place to do business” (as in their email this morning) and you think who they are talking about, it’s hard to share their grief. So we might not want the taxman at our front door, but we do want him at theirs.

Take as an example the new offshore disclosure opportunity. This follows of course the declaration from the G20 that “the era of banking secrecy is over”. That, so far, is an overstatement : but it is worth noting that the next disclosure opportunity had been expected to be for property owners either in or outwith the UK. It is unlikely, perhaps, that the penalty on offer this time will be as low as 10% : but then if you wait for them to come to you now the penalty is most unlikely to be less than 30%. There can be very few people with undeclared offshore accounts who will feel completely safe this time round, and I would not be surprised if the yield from this one is much higher than from offshore 1.

There is the naming and shaming of serious defaulters (though I can see some deals of the order of “OK, we’ll pay the tax upfront but don’t put us on the website”).

There is a formal follow up to enquiries which produce evidence of deliberate evasion, with a requirement to submit more detailed returns for five years. Here’s a burden, but it’s self-inflicted.

There is the consultation on working with agents : a very tentative step so far, and one that is potentially looking to mobilise opinion against bad and incompetent agents. It is needed : incompetent agents are a menace to taxpayers, because the newly self employed person hasn’t a clue as to what he or she needs and may end up either with a cheap and cheerful incompetent or paying someone else far too much for bells and whistles.

At the other end we have the extension of the 3-line account on the tax return to everyone below the VAT threshold – that’s 85% of business self assessment returns. It is of course a tacit admission that risk analysis based on the standard accounts information was of very little use, but it also points up a helpful move away from the bashing of small business and hopefully a pursuit of more serious offenders.

It’s taken a long time from the merger, and there’s an enormous amount still to be done, especially on service delivery, but we could be beginning to see the real shape of HMRC.

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By User deleted
02nd May 2009 15:43

Short answer.....
No.

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