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PBR: HMRC modernising powers, deterrents and safeguards. By Nichola Ross Martin

6th Dec 2006
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No radical changes were announced in the pre-budget report concerning HMRC's powers, penalties and changes to administration, despite some heavy betting that the chancellor would increase SA late filing penalties. HMRC has though published a "consultation on the developing programe of work" following responses to their March 2006 consultation.

HMRC has laid down plans for future work on safeguards in a three stage process:
• developing the idea of basic guiding principles, and preparing a comprehensive catalogue of existing safeguards;
• a review, including external consultation, of how effective these safeguards are in practice, and the identification of gaps, inconsistencies or lack of clarity;
• consideration of the best ways of addressing significant inconsistencies, filling significant gaps and improving ineffective safeguards.

This work will be taken forward with a view to issuing a consultation document on safeguards in the first half of 2007.

A further consultation on criminal investigation powers closed on 1 November.

Developments on penalties
HMRC has been developing and testing the likely impact of a new penalty model, aligned across Corporation and Income tax Self-Assessment, PAYE and VAT and in accordance with the principles set out in the earlier consultation document.

Developments on interventions
HMRC has been considering the responses to the March consultation together with other feedback related to the trials of new interventions in the summer, with the aim of producing a more detailed framework and understanding of the legal changes needed to support it.
The representative bodies were not impressed with the way that the interventions were piloted so soon after the consultation. HMRC says that they will look at improving current interventions, new ways to tackle non-compliance and new inspection and information powers and safeguards.
It anticipates undertaking a further consultation in the first half of 2007.

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