New HMRC trials to be on a voluntary basis

HM Revenue & Customs (HMRC) has issued a statement saying that those tax payers selected for the new compliance trials will be asked to take part on a voluntary basis - though some could also face a formal enquiry.

Last week, HMRC announced a series of new approaches, which will take place at selected locations around the UK. They are intended to explore a lighter touch to tax enquiries, particularly for those likely to make mistakes in relation to their tax, rather than those who are deliberately trying to pay less tax than is due.

However, some of the approaches have been seen as heavy-handed, particularly one which gives HMRC the power to change a tax return where it believes a correction is necessary.

Now HMRC has issued a further statement explaining its implementation of these new approaches.

HMRC statement

The statement from HMRC said:

"From July 2006 HMRC will trial some new compliance interventions. These approaches are being developed to provide a broader range of risk based interventions which focus on simpler, less time-consuming ways of helping our customers make sure they pay the right amount of tax. We want to give taxpayers information relevant to their circumstances, and help them get things right, while avoiding unnecessary bureaucracy. In many cases, these new approaches will avoid the need for a full-scale enquiry, which can sometimes be expensive and time-consuming.

"Those selected for inclusion in the small-scale trials are selected on the basis of an identified risk.

"They are being asked to take part on a voluntary basis.

"If taxpayers choose not to take part in the trial they will not automatically be subject to an enquiry/EC (Employer Compliance) review or VAT assurance visit. However a risk will still exist and is likely that a proportion of those customers will be selected for a compliance intervention. Any enquiry would be opened formally at that point.

"It is also possible that a full enquiry / VAT Assurance Visit or Employer Compliance review may be necessary for a small number taxpayers who take part in the trials and are found to have made significant errors or have complicated affairs where a more formal approach is more appropriate. Taxpayers and their agents will be made aware of any need to enter into another compliance intervention as soon as it becomes evident.

"Agents will be copied in on all letters sent to clients, and, where an individual has a tax agent, any telephone contact initiating an 'intervention' will be made to the agent.

"You can read more about these new approaches in the recent consultation document, Modernising Powers, Deterrents and Safeguards."