ICAEW commends the government and HMRC for seeking to modernise the administrative framework underpinning the tax system, but will HMRC have the resources to do it properly and how radical might any changes be? ICAEW’s Tax Faculty explains the call for evidence and seeks the views of members.
The Taxes Management Act 1970 (TMA 1970) is now more than 50 years old and has long needed updating to consolidate changes made in subsequent Finance Acts and to make it work in a modern, digital tax system.
Part of a suite of announcements on 23 March, the government’s call for evidence on the tax administration framework review (TAFR) goes much further than updating TMA 1970 and considers fundamental elements of the tax system including:
- The identification of taxpayers and agents, and registration and deregistration requirements.
- How tax liabilities are established and assessed, including claims and elections and basis period rules.
- HMRC’s use of data and information and how it can be used to simplify compliance, including evolving roles and responsibilities of HMRC, taxpayers and third-parties. (See ICAEW's response to the OTS call for evidence into the smarter use of third-party personal tax data.)
- The framework for tax payments and repayments, including the scope to align rules across different taxes. (More timely payment of income tax self assessment and corporation tax is considered in a complementary call for evidence.)
- Powers, sanctions and safeguards, building on the work of the 2020 Evaluation of Powers and Safeguards. This includes consideration of where accountability lies for the completeness and accuracy of data (for example, where third-party information is provided or pre-populated).
The TAFR call for evidence follows from the publication of HMRC’s 10-year strategy Building a trusted, modern tax administration system in July 2020.
The review is billed as an opportunity "for reform” and "to design a trusted, modern tax administration system that is simpler, easier to navigate, and more response to taxpayers' needs".
ICAEW’s Technical Lead and Senior Policy Adviser Anita Monteith has called for the tax year to be aligned with the calendar year and this review would appear to be an ideal opportunity for this to be considered.
Welcoming the prospect of engaging in these explorations of the administration framework before decisions are made, Frank Haskew, ICAEW’s Head of Tax says: “This review is an important step in developing a modern, trusted tax system. It is a mammoth project which will need to be broken down into manageable chunks. If the objectives are to be met it will require huge investment in HMRC’s systems alongside any legislative changes.
“No specific proposals have been made at this stage, but any changes will need to be very carefully considered and care taken to avoid unintended consequences or erosion of taxpayer rights.”
The call for evidence runs to 13 July 2021. The faculty will arrange a webinar to gather the views of all ICAEW members. In the meantime, please send comments to firstname.lastname@example.org.
More analysis of Tax Day announcements:
- Tax Day announcements take a long-term view
- Earlier tax payments may be coming in the next parliament
- HMRC consults on mandating PII for tax advisers
- More detail on notification of uncertain tax treatment
- Transfer pricing documentation requirements to be made more robust
- Did Tax Day deliver on sustainability?
Hear more at Virtually Live!
ICAEW's flagship digital conference returns for 2021 and includes sessions on tax. Hear from experts including Rebecca Benneyworth and ICAEW's Anita Monteith.
ICAEW Know-How from the Tax Faculty
This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.