Improving compliance

A new consultation sets out possible ways in which HMRC’s approach to correcting taxpayers’ inaccuracies could be improved, including:

• mandating the provision of additional information for reliefs and allowances, as introduced in the research and development (R&D) tax relief regime in 2023;
• reforming the conditions under which HMRC may issue a revenue correction notice; and
• introducing a partial enquiry process into specific issues or sections of a return without affecting the normal enquiry window.

In addition, the document considers a new power, requiring taxpayers to correct mistakes themselves. These potential changes are primarily focused on tackling lower value taxpayer errors and inaccuracy. 

The consultation period will run for 12 weeks and HMRC will be engaging with stakeholders through meetings and written responses.

Two further consultations will be published in the spring, on:

• reforming behavioural penalties; and
• improving access to alternative dispute resolution and statutory review.

HMRC has also published a summary of responses to the consultation on enquiry and assessment powers, introduced as part of the tax administration framework review.

Other announcements made in the budget include the following. 

• Tackling tax non-compliance in umbrella companies by moving PAYE obligations to recruitment agencies or end client businesses from April 2026
• Changes to tax rules on liquidations of limited liability partnerships from 30 October 2024
• Strengthening existing charity tax rules from April 2026 to prevent abuse
• Preventing non-compliance from the transfer overseas of UK tax-relieved pension funds
• Amending rules on extraction of shareholder funds from close companies
• Increasing the interest rate on unpaid tax from April 2025

MTD ITSA

In the Budget, the government signaled its commitment to the introduction of MTD ITSA in 2026 (for those with turnover over £50,000). MTD ITSA will be rolled out in 2027 to those with turnover over £30,000 and, in a new announcement, to those with turnover of more than £20,000 by the end of this parliament. ICAEW’s MTD hub includes more information, including on how to determine if a person must comply with MTD ITSA. 

ICAEW had indicated in its pre-Budget submission that while it supports digitalisation of the tax system and record keeping, it does not support aspects of MTD ITSA – particularly quarterly reporting – which will result in significant costs and additional administrative burden for taxpayers in return for limited benefit to HMRC.

ICAEW’s Budget webinar

To find out more about the measures discussed above, and other changes announced at the Budget, join members of the Tax Faculty at the Budget webinar on Friday, 1 November 2024. Attending the webinar could add up to 1.5 hours of verifiable Continuing Professional Development (CPD), providing you can demonstrate that the content is relevant to your role.