Reduced Tax Enquiry Times

HMRC believe Single Compliance Process will be less onerous

Following a successful trial of a new enquiry process, HMRC are to implement a Single Compliance Process (SCP) for small and medium-size enterprises (SMEs).

HMRC sees the SCP as a single framework within which the majority of future SME compliance checks will be carried out, covering multiple taxes. It will not apply however to Local Compliance Fraud cases and certain types of avoidance work.

Enquiries under the SCP framework will be conducted in three ways:

• desk based – for cases that can be worked either by correspondence or over the telephone, as HMRC currently does with Income Tax and Corporation Tax aspect cases and VAT pre-repayment credibility queries
• visits – to provide a simplified and faster route for those cases where a face to face visit is required (visits are distinguished between cases requiring either a 1 or 2 day visit)
• evasion – to address those cases showing evasion characteristics requiring evasion approaches from the outset such as surveillance or unannounced visits

The trial of the SCP was concluded on 31st March of this year with the key findings being:

• direct tax enquiries were concluded more quickly
• the new process didn’t slow down the current process of conducting VAT visits and there’s scope for further improvements by working some cases via telephone and/or written correspondence
• 86% of customers responding to the customer satisfaction questionnaire were extremely positive about their experience
• agents were complimentary about the new process with 63% of respondents reporting a more positive experience under SCP

The key elements that contributed to an improvement in the time taken to conduct enquiries will be applied in SME cases as follows:

• Open dialogue at an early stage regarding the risks HMRC have identified and the information/documents required
• HMRC working together with the taxpayer and their agent with a view to developing a working relationship at every stage of an enquiry
• Visiting taxpayer premises to review business records

Throughout all of this HMRC believes that enquiry times will be shortened thereby reducing the burden to taxpayers. The proof will, of course, be in the pudding.