The OTS has made 12 main recommendations for an overhaul of HMRC’s guidance for taxpayers, in a report which addresses the challenge HMRC faces of serving a large audience with different and conflicting needs, using an ‘enormous spectrum’ of published material.
Although the OTS has always made recommendations on guidance a significant feature of its reports on particular areas of the tax system, this is the first time it has devoted a whole report to the subject. HMRC is currently reviewing the structure and content of its 219 manuals and the OTS report is intended to complement that review.
Key recommendations include a ‘new model’ for guidance that makes greater use of technology and clearly identifies three levels of complexity: simple for the majority of individual taxpayers; more advanced for businesses; and technical for tax advisers.
HMRC should consult on the extent to which taxpayers ought to be able to rely on published guidance to escape liability to interest and penalties, similar to the Australian model.
Current use of the word ‘guidance’ ranges from general guidance for the public, which assumes no prior specialist knowledge, through to technical guidance which assumes prior knowledge and would generally be aimed at professional advisers or others with a tax background. Technical guidance includes some material expressing HMRC’s opinion where taxpayers or advisers with a tax background might reasonably disagree. The OTS believes HMRC should distinguish more clearly in guidance between statements of its opinion, as opposed to areas it considers to be generally accepted.
The OTS notes there was a good deal of consensus among those it consulted on the areas of concern in relation to current guidance, and broad agreement on the areas where the OTS is making recommendations.
Problems identified with the current guidance include the following:
The OTS’s ‘new model’ for guidance needs to clearly identify the level at which it is aimed. Three levels are suggested:
The OTS recognises that whether or not a taxpayer can rely upon the guidance can be a difficult legal question, but believes users ought to be able to know when and to what extent they can rely upon it. The report uses the Australian Tax Office (ATO) as an example. The ATO publishes two types of guidance: precedential guidance and other material. Precedential guidance is where the authority accepts it will be bound by the guidance, even if incorrect. The taxpayer may choose to apply the law if more favourable. The ATO does not accept it should be bound by other material, but it does accept that the taxpayer should not be liable for interest and penalties where they comply with the ATO views expressed.
The 12 key recommendations made in the report are:
The OTS has made 12 main recommendations for an overhaul of HMRC’s guidance for taxpayers, in a report which addresses the challenge HMRC faces of serving a large audience with different and conflicting needs, using an ‘enormous spectrum’ of published material.
Although the OTS has always made recommendations on guidance a significant feature of its reports on particular areas of the tax system, this is the first time it has devoted a whole report to the subject. HMRC is currently reviewing the structure and content of its 219 manuals and the OTS report is intended to complement that review.
Key recommendations include a ‘new model’ for guidance that makes greater use of technology and clearly identifies three levels of complexity: simple for the majority of individual taxpayers; more advanced for businesses; and technical for tax advisers.
HMRC should consult on the extent to which taxpayers ought to be able to rely on published guidance to escape liability to interest and penalties, similar to the Australian model.
Current use of the word ‘guidance’ ranges from general guidance for the public, which assumes no prior specialist knowledge, through to technical guidance which assumes prior knowledge and would generally be aimed at professional advisers or others with a tax background. Technical guidance includes some material expressing HMRC’s opinion where taxpayers or advisers with a tax background might reasonably disagree. The OTS believes HMRC should distinguish more clearly in guidance between statements of its opinion, as opposed to areas it considers to be generally accepted.
The OTS notes there was a good deal of consensus among those it consulted on the areas of concern in relation to current guidance, and broad agreement on the areas where the OTS is making recommendations.
Problems identified with the current guidance include the following:
The OTS’s ‘new model’ for guidance needs to clearly identify the level at which it is aimed. Three levels are suggested:
The OTS recognises that whether or not a taxpayer can rely upon the guidance can be a difficult legal question, but believes users ought to be able to know when and to what extent they can rely upon it. The report uses the Australian Tax Office (ATO) as an example. The ATO publishes two types of guidance: precedential guidance and other material. Precedential guidance is where the authority accepts it will be bound by the guidance, even if incorrect. The taxpayer may choose to apply the law if more favourable. The ATO does not accept it should be bound by other material, but it does accept that the taxpayer should not be liable for interest and penalties where they comply with the ATO views expressed.
The 12 key recommendations made in the report are:
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