The ICAEW has gone on the attack over proposed changes to child benefit, calling it a “policy disaster” which is in danger of becoming an “operational and reputational disaster” when it becomes law.
It told the Treasury in a confidential briefing document, as revealed by The Telegraph, that the plan to deny the benefit to families with a high earner “is seriously flawed in principle and in practice”.
Chief executive Michael Izza said in his blog that their concern came out of the ICAEW’s “public interest role”, which is to help ensure the tax system works fairly and effectively.
With a growing number of concerns and pressures from its members, the institute had to “set down a marker” in response to this “complete administrative nightmare”, according to Frank Haskew, head of the Tax Faculty at the ICAEW.
Haskew told AccountingWEB: “Our biggest worry here is mixing up the tax system with the state benefits system - we're just going to get into an unholy administrative mess.
From January any family with a parent earning more than £50,000 a year will lose a proportion of their entitlement and families with a single earner on more than £60,000 a year will not receive it at all.
Under these proposals an additional 500,000 people will have to fill out self-assessment tax returns
Haskew added: “At a time when HMRC is struggling to cope, let alone with an extra half a million tax returns coming in, the way this is being proposed has got trouble written all over it. We need to move to a tax system which is simpler, not more complicated.”
The institute also said that the changes could result in taxpayers being penalised for failing to submit information they have no access to, particularly if the relationship breaks down.
“Taxpayers could find their tax confidentiality breached and experience lower service standards while grappling with an even more complicated system. Their confidence in HMRC and the tax system will be undermined and there will be behaviour changes and planning to avoid the charge,” it added.
On the next steps in the institute’s campaign, Haskew said: “We did ask Treasury for a meeting, but we haven't been granted one. We’re still hopeful that there will be some ability to have a meeting to consider the great difficulties ahead with the view to having a re-think.”
Last month when the child benefit fiasco unfoldedtax editor Rebecca Benneyworth said if the government did not relent, she would “spend a day chained to the railings outside the House of Parliament” to drive home the point.