Government announces plans to develop taxpayers' charter

Following last year's consultation on modernising powers, deterrents and safeguards, HM Revenue & Customs (HMRC) has published a summary of responses, along with three follow up consultation documents. Alongside this, the Government has also announced plans to develop a Taxpayers' Charter. So what are these consultations about and what will the proposed Charter mean for taxpayers?

What are the further consultations about?

Three follow-up consultations have been published as part of HMRC's work to provide greater consistency across all taxes in relation to its powers to investigate and challenge information it receives or does not receive from taxpayers.

The consultation documents cover the following:

• Penalties reform - the next stage
  This proposes to extend the new statutory framework for civil penalties for incorrect returns to all taxes, duties and levies administered by HMRC. The new penalties regime, which has not yet come into force, currently covers income tax, corporation tax, capital gains tax, National Insurance Contributions, VAT, PAYE and the Construction Industry Scheme.
  
  The consultation also proposes a new single penalty provision for failure to register a business for VAT or notify HMRC of a new taxable activity.
• A new approach to compliance checks
  This proposes a new framework for HMRC to check that taxpayers are paying the right amount of tax and claiming the right amount of repayments.
• Payments, repayments and debt
  This proposes four changes to the statutory framework which together would make it easier for taxpayers to pay what they owe and HMRC to collect tax debts.

The summary of responses and further consultations are published on HMRC's website at http://www.hmrc.gov.uk/consultations/index.htm under the headings "summary of responses to consultation"/"current consultations".

Dave Hartnett, HMRC's Acting Chairman, has urged all interested parties to help HMRC get the balance right be participating fully in the consultation.

What will the Taxpayers' Charter aim to do?

The respondents to last year's consultation agreed that a Charter could be an important element in making safeguards useable and accessible. HMRC has therefore said it will begin the process of working with interested parties to develop the Charter, which will set out taxpayer rights and responsibilities in a single document.

The concept of a Taxpayers' Charter is not new. For example, it was suggested by respondents to an initial consultation on powers, deterrents and safeguards, published in 2005. In fact we used to have a Taxpayers' Charter in the 1980s although it was later replaced by a more vague 'service commitment'.

Francesca Lagerberg, Head of Grant Thornton's National Tax Office says: "The news about a Taxpayers' Charter is a positive step forward. We are one of the few developed countries without one and it provides a backstop to protect taxpayers' rights. It needs to be clear and enforceable to be effective and with consultation it can draw on the many good examples of Charters around the globe."

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