9 February 2021: HMRC concludes its approach to implementing powers has been broadly consistent with the 2005 – 2012 Powers Review principles, but that there is room for improvement. HMRC also sets out 21 commitments to address the findings.

On 4 February, HMRC published an evaluation as part of a wider Powers and Safeguards programme, which includes changes being considered in response to Sir Amyas Morse’s Independent Loan Charge Review.

The  findings arise largely from engagement with a powers evaluation forum (the Forum) which comprised representatives from 16 organisations, including professional bodies such as ICAEW.

Data from reviews, complaints and litigation show that taxpayers have formally challenged HMRC’s decisions on only a small number of cases. However, members of the Forum shared several individual cases where no challenge or complaint had been made, but where HMRC could and should have approached them differently.

These examples highlight the need for HMRC to ensure a consistent approach while taking account of the individual circumstances that a taxpayer may face.

They also show how any perception that HMRC’s decisions are not aligned with its principles are exacerbated when HMRC appears not to have fully reflected a taxpayer’s behaviour or circumstances.

The 21 commitments that HMRC makes in the evaluation report include:

• Updating its guidance to clarify taxpayers’ rights and obligations, such as in respect of Follower Notices and Requirement to Correct obligations.
• Improving awareness of HMRC’s internal governance processes, such as in relation to the General Anti-Abuse Rule, Accelerated Payment Notices, Follower Notices and Diverted Profits Tax.
• Providing more clarity in its guidance on reasonable excuse and building more consistency of approach in individual cases.

HMRC is also looking to make improvements to:

• its engagement with harder-to-reach audiences in raising awareness of new powers and obligations;
• ways in which feedback on its guidance can be collected and acted upon;
• written communications, such as letters sent during an enquiry, to help taxpayers understand their rights and obligations more easily; and
• support to those experiencing financial hardship.

Overall, the aim is to ensure that, in relation to compliance activity, taxpayers are treated fairly and professionally, taking account of their individual circumstances and needs.

HMRC plans to continue working with members of the Forum to ensure the implementation of any future powers reflects the learnings from the evaluation and its commitments.