Dave Hartnett has declared that HMRC is up to the challenge of proving that it is an ‘efficient, even-handed and listening organisation’. Responding to criticism of the department’s approach to large business, the Permanent Secretary for Tax said it would be wrong to use the term ‘settlement’ pejoratively.
Anthony Thomas, President of the CIOT, criticised HMRC’s record on several fronts in a Tax Journal article earlier this month.
In a detailed response published in this week’s issue, Hartnett noted a ‘widely-held and growing perception’ that HMRC was taking a ‘too collaborative’ approach to large business taxes. The department works with tax agents to reach a settlement of open tax issues or enquiries, he wrote.
‘The term “settlement” itself risks becoming pejorative, appearing to represent a compromise that is second best to litigation. This is wrong. HMRC’s tax settlements are underwritten by a Litigation and Settlement Strategy that means when matters are clear, and established principles are at stake, we will not settle under any circumstances.
‘However, if we reached a place where every case went to court to settle, tax administration would be severely hampered, as the flow of corporate tax revenues slowed to a trickle, and customers would undoubtedly see long delays before they had certainty. Reaching appropriate settlements makes sense for us all.’
A one-size-fits-all approach to compliance could not work, Hartnett argued. Unlike large businesses with in-house tax expertise, most SMEs did not have the time or inclination to deal with HMRC direct and employed accountants to do so. ‘That’s exactly why we are so determined to get our relationship with agents right,’ he said.
Dave Hartnett has declared that HMRC is up to the challenge of proving that it is an ‘efficient, even-handed and listening organisation’. Responding to criticism of the department’s approach to large business, the Permanent Secretary for Tax said it would be wrong to use the term ‘settlement’ pejoratively.
Anthony Thomas, President of the CIOT, criticised HMRC’s record on several fronts in a Tax Journal article earlier this month.
In a detailed response published in this week’s issue, Hartnett noted a ‘widely-held and growing perception’ that HMRC was taking a ‘too collaborative’ approach to large business taxes. The department works with tax agents to reach a settlement of open tax issues or enquiries, he wrote.
‘The term “settlement” itself risks becoming pejorative, appearing to represent a compromise that is second best to litigation. This is wrong. HMRC’s tax settlements are underwritten by a Litigation and Settlement Strategy that means when matters are clear, and established principles are at stake, we will not settle under any circumstances.
‘However, if we reached a place where every case went to court to settle, tax administration would be severely hampered, as the flow of corporate tax revenues slowed to a trickle, and customers would undoubtedly see long delays before they had certainty. Reaching appropriate settlements makes sense for us all.’
A one-size-fits-all approach to compliance could not work, Hartnett argued. Unlike large businesses with in-house tax expertise, most SMEs did not have the time or inclination to deal with HMRC direct and employed accountants to do so. ‘That’s exactly why we are so determined to get our relationship with agents right,’ he said.
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