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istock_box-ticking_Laurence Dutton

HMRC sets professional standards for compliance

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HMRC has committed to upholding a set of professional standards for compliance activity.

3rd Aug 2023
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The Revenue has introduced four professional standards for compliance, which sets out the way the tax department will “behave and act when conducting any form of compliance work”.

As other parts of HMRC have come under scrutiny for poor service levels, the professional standards for compliance has largely been welcome across the profession, with professional bodies seeing the standards as a step towards driving a more collaborative approach to compliance. 

The four standards are: 

  1. Getting things right
  2. Being aware of customers’ situation
  3. Being responsive – communicating with customers
  4. Treating customers fairly.

HMRC said the standards will play “a vital role in helping us become a trusted and modern tax department”. 

Outlining its commitment, the professional standards for compliance states: “When we talk about professionalism, we mean doing the right things in the right way, at the right time to get the right outcomes for HMRC and you, our customers.” 

The standards should be familiar to anyone who is aware of HMRC’s charter. While they’re aligned to HMRC’s charter, the standards for compliance activity are slimmed down from the seven scribed as its standards of behaviour and values. 

What are the standards?

The four standards are underpinned by an expectation and six key requirements. 

The first standard is “getting things right”. Effectively this standard means that HMRC will correctly apply the law, guidance and business procedures in its compliance activity. 

The six requirements range from “making sure all calculations of liability are correct” to upholding general data protection regulations (GDPR) and providing “timely, factual referrals to resolve tax disputes when we reach the limits of our authority”. 

Next up is “Being aware of our customers’ situation”. HMRC’s pledge here is making sure it is “as easy as possible” to engage with the tax department’s compliance activity. Included here are the requirements to “apply an understanding of our customers’ requirements”, “show sensitivity to our customers’ wider circumstances”, avoid delays and make sure compliance requests are “necessary and reasonable”. 

The third standard is “Being responsive and communicating with customers”. To meet this standard, HMRC said it would “communicate the right information in the right way at the right time”. 

HMRC said it would meet this standard through keeping taxpayers “informed throughout the compliance activity”, by being “clear, concise and accurate in all our communications”, explaining why they’re asking questions and requesting information and responding to taxpayers’ “questions and concerns as quickly as we can”.

The final standard is “Treating customers fairly”. To achieve this, HMRC said it will “establish the facts and make and record fair, lawful and impartial decisions”. Included in this is the requirement to “presume that our customers are telling the truth unless we have evidence to suggest they are not” and “regularly consider the benefit of continuing our compliance activity”. 

Industry reaction

The accountancy and tax bodies have mostly supported the introduction of these standards. 

Richard Wild, the head of tax technical at the Chartered Institute of Taxation (CIOT), also welcomed these standards. “It should help drive behaviours that will lead to a more collaborative approach to compliance, particularly as the vast majority of businesses and individuals just want to get their taxes right.

“It’s also helpful that the standards set expectations for compliance staff and their managers, and we would expect these to form part of their individual performance appraisals.”

Glenn Collins, the head of technical and strategic engagement at the Association of Chartered Certified Accountants (ACCA), was pleased that the standards referenced speed, accuracy and the principle that taxpayers and agents are telling the truth.

“This is an important development for taxpayers and agents as this HMRC team has recognised improvements were needed and have taken action,” said Collins.  

“We will have to see how this transfers into the changes that are needed but the setting out of the framework and how they will behave and act when conducting compliance work is a real step forward.” 

He added, “We now need other parts of HMRC, especially the other teams where we still see poor service, to also take similar action.”

Is HMRC meeting the standards?

The introduction of these new standards for compliance comes hot on the heels of the Revenue taking a bruising in its annual charter report, where tax agents and taxpayers criticised HMRC’s performance and its ability to meet the standards of being responsive, making things easy and getting things right.

As part of the charter stakeholder group, the ACCA and the CIOT alongside other professional bodies surveyed taxpayers and agents on HMRC’s compliance with the charter. While the questions didn’t specifically look at HMRC’s compliance activity, the results reveal a lot about taxpayers and agents’ feelings on the current standard. 

In the survey, HMRC scored only 2.3 out of 10 for being responsive and the same complaints can be said for compliance activity too. Wild said the CIOT has heard of compliance cases taking a long time to resolve, particularly while the taxpayer or agent is awaiting a response from HMRC. 

Comments from the survey highlighted examples of HMRC being non-responsive in its compliance activity. One respondent said they have waited for an research and developement expenditure credit (RDEC) claim to be corrected for nearly 12 months. Their letters and emails have been ignored and they can’t call the R&D team. Another respondent complained about HMRC leaving enquiries “needlessly open” without a fixed timeline. 

The standards of “being aware of your personal situation” and “treating you fairly” scored slightly higher at 4.1 and 4.8 out of 10, and there are similar complaints in the compliance space. 

As an example, Wild raised the common issue of HMRC requesting information, typically to be provided within 28/30 days, and follows this up with an information notice if it is not forthcoming within that short timeframe, even when the taxpayer is trying to comply but just finding it difficult sourcing the relevant information. “This can be particularly galling when HMRC don’t respond in similar timescales,” said Wild. 

A survey respondent said: “There is normally a feeling that HMRC believes a taxpayer is “up to no good” rather than assuming the taxpayer is trying to get things right.” While another raised the need for equal response times on both sides for compliance. “If they demand 30 days, then same for their time frame response,” they said. 

Weighing up HMRC’s ability to meet the compliance standards, Wild is optimistic: “While overnight changes are unlikely, as HMRC staff become more familiar with the standards, and as taxpayer and agent awareness of them grows (with taxpayers and agents reminding HMRC of them), the compliance process can only improve.”

Replies (12)

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By SteveHa
03rd Aug 2023 10:14

Of course, what HMRC refer to as compliance activity is NOT what we refer to as compliance activity.

For us, compliance is generally humdrum ensuring that our clients do the right thing.

To HMRC, compliance tends to be more specialist, referring to enquiry work and similar (e.g. S9A).

So this is quite a narrowly defined standard.

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Replying to SteveHa:
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By Hugo Fair
03rd Aug 2023 17:58

That was the first thing I thought on just reading the intro ... but then two more thoughts hove into view (as well as not instead of your relevant point):

* What happened to the items 'dropped' from the regular Charter (which has itself just last month been reduced)?

* What are the repercussions of failure by HMRC (statistically at year-end or, more importantly, within individual enquiry cases)?

At the moment this is all about as useful as those letters from your Bank (or utility company or whoever). The ones that start with "We are pleased to announce .." before proceeding not to tell you anything clearly (but leaving you with a sense that you've just been mugged).

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By Catherine Newman
03rd Aug 2023 10:34

I have two compliance cases-in one they are pursuing the Loan Charge where the client committed suicide in 2019 so they are definitely not considering the position of the client and pursuing the widow when the Estate is insolvent and one is for IR35. Luckily in the latter case compulsory strike off due to non-filing of a Confirmation Statement is going through.

In the case of the Loan Charge one, I have used Jim Harra's email address but nothing has happened.
They have to follow their procedures.

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By EdithErdmann
03rd Aug 2023 13:18

Thanks for sharing such kind of beautiful article we must say that this is really nice.

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By Tom+Cross
03rd Aug 2023 13:52

I know I'm sarcastic and have a lifetime of loathing HMRC but this latest 'policy' really does take the biscuit.
From what I can see, the CEO (Sir Harra) sits in the lofty tower and does nothing, absolutely nothing to correct the damaged relationship, between; agents and taxpayers'. The reason being, he's worked through the echalons within HMRC, for his entire working life and is blinkered, when he steps outside.
This article merely demonstrates the gulf, between the attitude of the public sector, to the private sector, the latter ensuring that the public sector continues to exist.
I used to have complete respect for what was the Inland Revenue and HM Customs & Excise, when I began my accountancy journey. Now, I simply smile, when anyone mentions HMRC. It's akin to one of those smiles, which dogs do, just before they throw up.

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By monksview
04th Aug 2023 09:47

Tell that to Inspector Doyle

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By GrayMan
04th Aug 2023 10:20

I think most will have the same opinion that if the inland revenue thinks a tax decision based on current regulations is costing them they will appeal it to the highest authority. If they lose the government will simply change the rules.

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Replying to GrayMan:
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By moneymanager
05th Aug 2023 15:23

Yes, as per the Lady Eversden case and the awful POAT legislated in response.

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By Rgab1947
04th Aug 2023 15:54

Hate being called a customer. I am a tax payer. If a customer I would decline doing business with HMRC.

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By Mr J Andrews
04th Aug 2023 15:59

What a load of hypocrisy. HMRC have completely bastardised the word 'Compliance' with this so called commitment . As SteveHa points out , compliance to the Revenue is a one sided playing field to suit their checks - CC/FS1 to CC/FS8 for starters , Enquiry work etc. In fact anything within their 'Compliance Manual' to maximise the take for interest / penalties for getting something wrong.

The true meaning of the word is,of course, to obey a law or rule which should equally apply to the duty and care and management expected from HMRC within the meaning of the 1970 Taxes Acts. So for the Revenue to state they will .....'' behave and act when conducting ANY form of compliance work.....'' ain't going to happen. If anything, the general deplorable customer service will deteriorate even further with this attempt to push { their version of } Compliance. And I doubt we'll see any change to the four standards mentioned in any event , if previous form is anything to go by. It must be stressed that these professional standards are directed to HMRC's ''Compliance ''staff and it's a case of [***] the rest of the Department.......Not good at all.

Good to see Walter Mitty has been recruited by HMRC. Who else could have stated these standards will help play a vital role.........in becoming a trusted and modern tax department.

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By moneymanager
05th Aug 2023 15:21

Is it April 1st?

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By [email protected]
07th Aug 2023 17:04

HMRC is made up of human beings. In general, the 95% in HMRC's lower ranks are try to do a good job, but struggle with unattainable targets, ridiculous workloads and insufficient training to get it right when the system is unreasonably complex. The 5% at the top would probably like to provide sufficient staff but it's not in their gift. Instead, they make pious pronouncements of intent.

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