Budget 2009 Commentary
HMRC becomes more powerful
HM Revenue & Customs (HMRC) has continued its review of the powers and safeguards in place within the legislation. A number of changes were introduced in previous years but further developments have been announced in the 2009 Budget.
Debt collection through PAYE
HMRC has announced it will have the power to collect small debts it is owed through the PAYE system.
Income tax, capital gains tax (CGT), corporation tax, VAT, PAYE, National Insurance Contributions (NIC) and the Construction Industry Scheme (CIS) are already subject to the compliance checking framework. This will now be extended to apply to the environmental taxes, insurance premium tax, stamp duty land tax, stamp duty reserve tax, inheritance tax and petroleum revenue tax.
The introduction of the compliance checks framework sought to align the enquiry procedures for the various taxes so that the old Inland Revenue and old Customs powers were modernised.
With the extension of the framework to the remaining taxes, HMRC is now able to review the tax position of a taxpayer across all taxes on the same basis.
The compliance checking framework encompasses a number of measures including penalties for failure to allow inspection or information notice, a power to inspect statutory records and a power to require supplementary information relevant to the correct tax position. The time limits for amending returns are also being aligned and in most cases will now give four years for HMRC to make an assessment or the taxpayer to make a claim.
Disclosure of tax avoidance schemes
The legislation surrounding certain tax planning that is required to be reported to HMRC is to be subject to further consultation with a view to possibly extending the number of situations in which HMRC has to receive notification of planning. This notification procedure was first introduced in 2004 and has been the subject of amendment since then, the consultation process now announced suggests that further change is to be expected.
In addition HMRC is to consult on introducing tougher sanctions for non-compliant taxpayers and agents.
As a balance to the review of their powers, HMRC has agreed to introduce a Charter for taxpayers. This is to be in place by 31 December 2009.
The Charter seeks to set out standards of behaviour and values to which HMRC will aspire in dealing with taxpayers and others. HMRC will also be required to report on its performance in meeting the Charter standards each year.