HM Revenue and Customs (HMRC) has given the green light to introduce nationally a new framework under which the majority of SME compliance checks will be undertaken in future.
Designed to reduce the burden on businesses whilst increasing its officers’ efficiency, HMRC’s single compliance process will be utilised for single tax and cross-tax enquiries into small firms.
Following a successful trial which concluded in March, the process will soon become standardised, however it will not be applied in Local Compliance Fraud cases or the Contractual Disclosure Facility; nor will it apply in certain types of avoidance cases.
The single compliance process will primarily focus on the "risks or behaviours" that Revenue officers identify using three separate approaches.
For cases that can be worked by correspondence or over the phone.
For cases that require a face-to-face meeting.
For cases that require "evasion approaches" from the outset, such as surveillance or unannounced visits.
As a result of this three-tiered approach, direct tax enquiries should be able to be concluded more quickly. Some VAT visits in the trial displayed scope for being carried out as ‘desk-based’ cases, and in the main, both accountants and taxpayers report a more positive experience of HMRC’s activity.
Revenue compliance staff approaching a small business should emphasise ‘early and open dialogue’, promoting ‘collaborative working’ with the taxpayer or their accountant and, where necessary, conduct on-site reviews of business records.
Industry reaction to the specification of HMRC’s new compliance approach remains lukewarm yet supportive, with the Association of Tax Technicians (ATT) cautiously optimistic about the "mutual benefit of quicker resolution to tax enquiries".
Yvette Nunn, president of the ATT, added: “It is in everyone’s interest to have a process for business tax enquiries that enables speedy and fair resolution.
"For whatever reason, far too many HMRC enquiries have in the past taken too long to resolve. That is inefficient for HMRC and can really distract business owners from getting on with what they are meant to be doing – running their businesses."
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