HMRC service standards

The announcement that from 2 October 2023 the 10-minute call wait standard on HMRC’s Agent Dedicated Line will be removed and that PAYE queries will be rerouted was met with widespread disbelief and anger. However, many agents reported that waiting times are far longer than 10 minutes. In an ICAEW press release, ICAEW’s CEO Michael Izza said: “It seems clear that HMRC does not have the tools to manage the tax system effectively and efficiently, so to restore confidence we want to see a thorough review with a plan to improve services and develop digital capabilities for the future.” 

We appear to have reached a new low in HMRC’s service standards. But how we help HMRC to improve matters is proving very challenging. We will continue to raise these concerns through other routes including the Public Accounts Committee, which currently has a call for evidence on HMRC’s performance that closes on 20 October. 

Tax Faculty staff also met with a team from the National Audit Office, which is planning to launch a study into HMRC service standards.

Regulation of the tax profession

Last month, we reported on some meetings that a number of professional bodies had with HMRC to discuss the regulation agenda. A further meeting is scheduled in October to discuss the issues in more detail. Tax Faculty staff also held further discussions with the professional bodies concerned in order to identify key areas for discussion at that meeting, including the need to identify the problems we are trying to solve, how we might obtain better data to help inform any decisions and what more we can do to help promote the role of professional tax agents. 

Tax simplification

Following a number of meetings with HM Treasury and HMRC on how tax simplification will be embedded into their work, a number of professional bodies including ICAEW’s Tax Faculty wrote to the Financial Secretary to the Treasury (FST) to express some concerns about the project and what needs to be done to ensure that the approach will succeed. 

Ethical standards in tax

The International Ethics Standards Board (IESBA) has been working on a long running project to include a new ethical code on tax planning and related services into its international ethical code, which currently contains very little relating specifically to tax. ICAEW’s ethical code is taken directly from the IESBA code and ICAEW, as members of the International Federation of Accountants, is bound to adopt any changes to the code published by IESBA. 

As such, this is of high importance to ICAEW members providing tax services, not least because ICAEW already has the Professional Conduct in Relation to Taxation code. The latest draft contains a number of aspects that are of concern – in particular whether the draft might prohibit member firms providing services relating to resolving tax disputes. We have raised the concerns directly with IESBA and will report further. 

Making tax digital

On 4 September, a team from the Tax Faculty met HMRC to discuss our letter of 27 April 2023 expressing concerns about making tax digital income tax self assessment (MTD ITSA) and HMRC’s reply. HMRC fielded a large team, including two Director Generals. 

We reiterated our main message: we do not think that the current plans are deliverable and that we remain opposed to the principle of quarterly reporting. A ministerial announcement and revised MTD ITSA regulations are expected in the next few months. However, there remains widespread concern about the MTD ITSA project across the accounting, tax and software sectors.

Representational work

September was a busy month for tax representations, including a number of representations on the draft clauses to be included in the next Finance Bill. They were the proposed changes to pensions lifetime allowance, changes to the research and development (R&D) tax relief regimes, criminal sanctions on those who continue to promote tax avoidance schemes and proposals for further data requirements to be provided by employers. In each case we proposed amendments to the draft to address our concerns.

In addition to concerns about the proposed reform of the R&D regime included in the draft Finance Bill clauses mentioned above, members report many concerns about the current operation of the existing R&D tax relief system. These include evidence of continued poor standards in the R&D claim sector and also problems with HMRC’s compliance approach, which is resulting in legitimate claims being subject to challenges and long delays in processing. We are reconvening an ICAEW R&D working party to review the current situation and how we might suggest improvements, recognising that this is a high-risk area for HMRC and there is continued evidence of poor practices in the sector. 

Representations published

The Tax Faculty submitted seven representations in September, as follows: 

ICAEW REP 088/23 The future of customs declarations

ICAEW REP 089/23 Oil and gas fiscal regime review – call for evidence

ICAEW REP 090/23 Abolishing the pensions lifetime allowance

ICAEW REP 091/23 Legislative reform of the Terminal Markets Order

ICAEW REP 092/23 Change to data HMRC collects from customers

ICAEW REP 093/23 Tougher consequences for promoters of tax avoidance

ICAEW REP 095/23 R&D Tax reliefs reform

Tax Faculty committee and other meetings

During the month there were meetings of the Tax Faculty Board, the Tax Policy and Reputation Committee, the Business Tax Committee, the Compliance and Investigations Committee and the Practitioner Tax Committee. Tax Faculty staff also attended and reported to ICAEW’s Practice Committee. Staff also attended meetings of a number of CIOT committees and a meeting of the Tax Directors of the Global Accounting Alliance.

TAXguides

TAXguide 06/23: A basic guide to pillar two

Webinars

On 26 September, Caroline Miskin and Lindsey Wicks presented the latest Tax in Practice webinar.