ICAEW has suggested how HMRC could make greater use of its existing debt recovery powers and prevent debts arising in the first place, in its response to a consultation on proposed extensions to its power to recover debts from businesses that fail to make tax payments.
ICAEW’s response to the consultation, published on 30 November 2021, includes a suggestion that HMRC issues tax determinations when businesses have failed to file tax returns after a certain period. This could work as a way of preventing tax debt arising through late filing. More could also be done to publicise HMRC’s existing powers and to improve dialogue between HMRC and businesses to encourage more timely tax payments.
Some of the mechanisms that ICAEW sets out in its response to prevent tax debts in the area of VAT include: split payments to be made to HMRC and to the supplier by the purchaser; greater use of the reverse charge mechanism; and digital reporting requirements and e-invoicing.
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