Save the date – the 2024 Hardman Lecture

We are pleased to announce that Ray McCann, former President of the Chartered Institute of Taxation (CIOT), has agreed to give the Hardman Lecture on 25 November, starting at 6pm in the Great Hall, Chartered Accountants’ Hall. The precise title is being finalised, but Ray is likely to focus on the thorny topic of regulation of the tax profession, what it might look like and why if the wrong approach is adopted it might create more problems than it solves. This will be an in-person event and places will be strictly limited. Keep an eye on our weekly newswire for further information and when bookings open. 

National Audit Office

The National Audit Office (NAO) is carrying out a study on the drivers of cost in the tax system. The NAO is looking into which aspects of operating the tax system impose the most costs on HMRC, intermediaries and taxpayers; the major factors that impact cost; and where opportunities exist to reduce cost.

The Tax Faculty met the NAO to discuss:

• the costs that stakeholders incur due to engagement with the tax system;
• our understanding of what drives these costs and the scope to reduce them, for example through simplification of the tax system; and
• insights we have relating to the costs of moving to a more digitalised tax system and the costs incurred by stakeholders due to failures with HMRC’s systems and processes.

We understand that the NAO’s emerging areas of focus for the report are likely to include: 

• upstream vs downstream compliance; 
• feedback loops; 
• digitalisation; and 
• real-time information.

We agreed to keep in contact with the NAO and follow up on these topics as further information comes to light. If you have any information on them you would like to share, please contact Caroline Miskin, Senior Technical Manager, Digital Taxation, at caroline.miskin@icaew.com

HMRC service standards

As reported in previous months, ICAEW and CIOT are working on a joint project to produce an evidence-based report on how member firms are finding interacting with HMRC, focusing on the telephone and webchat services. We ran a pilot to test the approach in July/August and are now rolling it out to a larger number of firms in September/October. The real-time data-gathering exercise aims to capture all experiences. Once the fieldwork is completed, we will be analysing the results with a view to presenting a report to ministers and HMRC later in the year on what we found and what recommendations we propose to improve matters. 

Caroline Miskin commented on new information about HMRC’s performance, which is included in HMRC’s annual report, charter report, surveys and final statistics for 2023/24. The government has committed additional funding to HMRC, but ICAEW has been clear that this needs to be targeted at improving frontline services, infrastructure and improved digitalisation, and not just additional compliance officers.

Engagement with HMRC

During the month, Caroline Miskin and I attended the latest meeting of HMRC’s Representative Bodies Steering Group. Areas we discussed included HMRC’s service standards and progress made by HMRC on bringing in more resources to address the service delivery challenges. HMRC also shared some initial thinking on confidentiality matters. 

During the month, tax faculty staff also attended meetings of a number of HMRC’s other regular forums including the Joint Customs Consultative Committee, the Agent Digital Design Advisory Group and the Virtual Communications Working Group. 

Members of the Tax Faculty’s Private Client Committee also met with HMRC’s team, which is working on the proposed changes to the rules for non-domiciled taxpayers. In addition, we attended a meeting with HMRC about a new area of work devising a set of proposed core expectations that would apply to all intermediaries – the idea being to have a revised version of the existing standard for agents that would apply to anybody who acts as an intermediary. The impact of such expectations is likely to be almost entirely within the unaffiliated sector, so it should not have a direct impact on ICAEW members.

Making Tax Digital (MTD)

During the month, there was a meeting of HMRC’s MTD Advisory Forum. We continue to engage with HMRC on the design and roll-out of the MTD programme, but our concerns about the timescale, reporting requirements and the costs to taxpayers remain. At the time of writing, we understand that the first quarterly returns have been submitted and we hope to be able to report next month about how this went. 

Tax Faculty and other meetings

During the month, there was a meeting of the Tax Policy and Reputation Committee. We also provided an update on tax developments to ICAEW’s Practice Committee.

ICAEW and CIOT held a number of meetings to discuss the HMRC service standards project (see item above) and other matters.

Tax Faculty staff also met with representatives of the 100 Group to explore the possibilities of joint working on a possible business tax roadmap for the new government to consider.

I attended the latest bi-monthly call of the Global Accounting Alliance. The call included a special presentation from a member of the Canadian Treasury team who sits on the United Nations Committee of experts responsible for reviewing the UN model convention and other tax developments. 

We discussed the work of the Committee and how it interacted with the work of the Organisation for Economic Co-operation and Development (OECD) in seeking to amend the international tax rules under the base erosion and profit shifting (BEPS) project. We discussed the growing influence of the United Nations (UN) in setting the international tax agenda, the apparent stalling of the OECD proposals in the US and the extent to which the work of the UN in this field might ultimately overtake the work of the OECD. The discussion highlighted that there is clearly increasing concern that the US may not sign up after all to the OECD BEPS proposals, which is likely to lead to countries such as Canada imposing, or other countries such as the UK retaining, their own digital services taxes.

Webinars, events and podcasts

Our monthly podcast series The Tax Track continues to get good feedback and engagement. The latest episode, MTD: what you should do now, was presented by Lindsey Wicks, Senior Technical Manager, Tax Policy. She was joined by Caroline Miskin, Senior Technical Manager, Digital Taxation, and Rebecca Benneyworth MBE FCA

During the month, Tax Faculty staff made a presentation on hot topics in tax policy to attendees at HM Treasury/HMRC’s annual tax policy school. Lindsey Wicks explained about problems areas in the tax system, including the taxation of work, and highlighted fault lines and cliff edges in the tax system. I highlighted areas of complexity in the tax system, why complexity is bad for the tax system and why previous attempts to try and simplify the tax system have not stemmed the tide of more complexity. We look forward to continuing the dialogue with policymakers on these topics later this year.