The Chartered Institute of Taxation (CIOT) responded to an HMRC consultation as the Revenue seeks to develop its penalties regime (for people who fail to meet their tax obligations) in line with the increasing digitisation of its services. In their response, the CIOT raised a number of points, including:
- Support for the principle of a single penalty system as part of the move to a single tax account for every taxpayer;
- A call for the review to consider whether the current regime is ‘fair and proportionate’, and operating properly;
- Understanding the importance of education as key to improving taxpayer compliance.
CIOT Tax Policy Director, Patrick Stevens, said: “After having been involved with the HMRC Powers Review which ran from 2005 to 2012, we are encouraged that this document represents a high level review with further consultation in due course. This demonstrates that HMRC understand that changes to the penalties regime require careful sustained consideration to better reflect differing taxpayer circumstances.
“HMRC’s digital strategy has prompted this review. However, there are wider concerns about whether the current penalty regime is fair and proportionate. Indeed, there is a strong case for review of the proportionality of the automated late filing and late payment penalties; how the Revenue establishes the behaviour that has led to errors and how it determines the appropriate level of penalty.
“It is right that HMRC use their increasing digital resources to promote compliance, by adopting a more personalised approach as they increase their ability to analyse taxpayer information. However, we believe that the Revenue can go further. Digital data in HMRC’s possession should be used to remind the vast majority of taxpayers of their obligations and of the consequences of non-compliance in a comprehensible and effective manner.
“Finally, we support the Office of Tax Simplification’s conclusion that there should be a full post-implementation review of the HMRC Powers Review work on penalties.”
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Susie Hughes © Shout99 2015
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