HMRC service standards

While the general election has paused our work with HMRC to address the significant issue of its service levels, ICAEW and CIOT have joined forces to work on the production of an evidence-based report, which we will use for presenting the case for change to ministers and HMRC later in the year. 

To evidence the issues agents face, we are running a real-life, real-time data gathering exercise on HMRC’s telephone and webchat services, capturing all experiences whether good or bad. Two firms have joined a pilot and we aim to expand to more participants in the autumn (watch this space for how to get involved). The report will present the evidence, include various information on HMRC’s role and resourcing and the numbers and characteristics of taxpayers who need to get in touch with HMRC, and provide recommendations on tackling the challenges. We will provide periodic updates on the project throughout the summer.

Regulation of the tax profession 

The professional conduct in relation to taxation (PCRT) bodies submitted a short letter to HMRC on jointly agreed points to supplement individual body responses to the consultation on the regulation of the tax profession. The letter highlighted that, of the approaches that were put forward in the consultation, the PCRT bodies would prefer Approach 1, but only if it is appropriately designed and scoped. Any chosen approach must be in the public interest and there must be parity between all individuals and firms providing tax advice and services. 

Approach 1 would build on work the PCRT bodies have done to drive high industry standards through developing and embedding the PCRT within our membership. The PCRT sets a high bar for standards. Using existing mechanisms for monitoring and enforcement would likely be the lowest cost option and the least disruptive for those who already meet high standards.

Professional standards

As noted in previous months, the International Ethics Standards Board (IESBA) has published a final pronouncement on tax planning and related services that potentially will impact on the existing pan-professional code of conduct in relation to taxation. Although the IESBA code covers similar ground to the PCRT, the scope is not identical and the drafting styles are very different. The challenge now is to reconcile the two documents in such a way that preserves the industry standard nature of the PCRT but also ensures that ICAEW, as a member of the International Federation of Accountants, is complying with its obligations to incorporate changes to the IESBA code into ICAEW’s existing ethical code. 

During the month, we held an initial exploratory meeting with IESBA on the subject and we also spoke to the Consultative Committee of Accountancy Bodies (CCAB) Ethics Group members to discover how the other PCRT and non-PCRT bodies are approaching adoption of the IESBA code. It is proposed that the PCRT bodies form a working party to consider the issues and how they might be resolved. Further updates will be published in due course.

Making Tax Digital (MTD)

Engagement with HMRC on MTD for income tax self assessment (ITSA) has paused during the pre-election period. The Tax Faculty has reminded the HMRC team of the many issues that need to be resolved and has also started to engage with other teams in ICAEW on wider issues including practice management, PCRT, ethics, etc.

Other areas of significant activity

On employment tax and national insurance contributions, we asked HMRC to clarify its policy on reimbursement of travelling expenses to venture capital portfolio company non-executive directors. HMRC has responded and we hope soon to issue agreed guidance. 

We have also requested clarification of how employers/payroll agents should report re-employed employee payroll IDs to prevent HMRC’s records from creating duplicate employment records, and how to ensure that the Enterprise Tax Management Platform calculates the correct employer pay as you earn liability when employees have two employments on the same payroll.

Tax Faculty meetings

During the month, there were meetings of the Tax Faculty Board, the Practitioner Tax Committee, the Private Client Committee, the Tax Policy and Reputation Committee and Compliance and Investigations Committee. We also provided an update on tax developments to ICAEW’s Practice Committee.

Other meetings

As part of reciprocal arrangements, Tax Faculty staff attended a number of meetings of the CIOT’s technical committees. In addition, the two bodies held a number of meetings to discuss the HMRC service standards project (see item above) and other matters.

General election media appearances

The general election produced many media requests and enquiries. The Tax Faculty’s Senior Tax Policy Manager Lindsey Wicks appeared on BBC Radio 4’s Money Box to discuss what measures in the main party manifestos could mean for taxpayers, providing insight to questions asked by listeners including on tax related to pensions. Meanwhile, TAXline Editor Stephen Relf appeared on LBC radio to discuss the economy, proposed tax cuts featured in the Conservative election manifesto and how they plan to fund them, and the reaction to it from a business perspective.

Webinars, events and podcasts

8 July – Basis period reform

You can watch a recording on a webinar delivered on 25 June: Next up in VAT: Navigating complexity and future trends.

Our monthly podcast series The Tax Track continues to get good feedback and engagement. The latest episode was presented by Lindsey Wicks and she was joined by tax faculty staff Caroline Miskin and Stephen Relf to discuss HMRC performance in light of the recent National Audit Office report.