The current state of HMRC guidance and how it can be improved upon is the subject of the Office of Tax Simplification’s (OTS) recent report titled ‘Guidance for taxpayers: a vision for the future’. The report calls for HMRC to transform the user experience and, in particular, make it easier for people to find the guidance they need and to be clearer about the reliance they can place upon it.
The Report: Guidance for taxpayers: a vision for the future
Problems with current HMRC guidance include:
Guidance covers a multitude of material ranging from general guidance for the general public which assumes no prior specialist knowledge, to the other end of the spectrum, technical guidance, for tax advisors. Technical guidance includes some material which expresses HMRC’s opinion or view of legislation, which a taxpayer or adviser may disagree with.
Whilst many may have thought HMRC’s technical manuals have always been in the public domain, it wasn’t until 1994 when, for the first time, detailed manuals intended as guidance and instruction for Inland Revenue staff were published. Even then, this was a subscriber service and it wasn’t until 2002 that they were published on the Revenue’s website for free.
Sometimes, the distinction between information, guidance and advice is hard to define but the boundaries can be roughly drawn up as follows:
This includes facts such as tax rates, thresholds and ceilings that are etched in stone, and other matters such as filing deadlines.
Covers instructions on how to complete a form, an explanation of what a piece of legislation means and how it works in practice, telling the taxpayer what actions need to be taken, using information and in what order.
Guidance could also alert a person to alternative acceptable options but never express an opinion or advise that person as to which choice is the best for them.
Includes pointing out options and then setting out which of these the taxpayer might choose and why. It might also identify an option that is riskier because of the level of uncertainty surrounding it.
HMRC has a mass of ‘guidance’ material, in fact just under 90,000 pages of it, which is loosely organised, thereby making it difficult to find material and deciding who it is written for. This has resulted in gaps, duplications and inconsistencies, causing confusion and frustration for those referencing material not to mention time consuming.
Greater clarity about the reliance taxpayers can place on guidance is a fundamental question in relation to HMRC material that aims to help the taxpayer, without aiding those who seek to abuse the system. Anybody referencing information must be assured that what they are being told is comprehensive, correct and reliable.
The question as to whether HMRC is bound by its guidance relies on the twin public law doctrines of ‘conspicuous unfairness’ and ‘legitimate expectation’. The general principle is that taxpayers may rely on guidance even where it ultimately turns out to be an incorrect statement of the law if a person can show they have reasonably relied upon the information, acted upon it to his/her detriment and, where applicable, made full disclosure to HMRC of all relevant facts.
Information should be able to be sourced quickly and efficiently but GOV.UK’s search function does not work well to the extent that the Government Digital Service (GDS) who run GOV.UK, expect people to use commercial search engines. Even HMRC staff said that when they are researching an issue, it is far easier to search material using third party search engines rather than using the HMRC intranet search facility!
Maintaining up-to-date guidance is challenging but the OTS were presented with a number of examples where draft guidance had been issued but had not been finalised until many months later, or where guidance was clearly out of date.
Guidance that is not kept updated on a timely basis is costly to everyone in terms of time and money. Manuals, in particular, are often not updated immediately and the OTS were provided with an example of an agent having to defend a client against arguments based on an outdated HMRC manual, when in fact this view had been reversed by a court case. This type of situation can lead to HMRC compliance staff reviewing returns based on out-of-date guidance, with the impact having greater effect in the areas of PAYE, VAT and the Construction Industry Scheme which operate in real time, rather than post event.
Specialist content designers help HMRC to deliver guidance to taxpayers and advisers in a way which translates complex language and processes into material which is much easier to understand, whilst maintaining factual accuracy and delivered in a web-friendly format.
GDS specifies that guidance must be written for those with a reading age of nine. In practice, however, this standard covers the 500 pages of mainstream guidance which is just a fraction of the total guidance produced by HMRC. GDS also aims for a consistent, non-uniform approach, illustrated by their advice about ‘Writing well for specialists’ and ‘Know your audience’.
The OTS has identified four themes from its consultations:
Eventually, the OTS’s suggested recommendations should give rise to a New Model of HMRC guidance to create a truly modern 21st century product, underpinned by modern information technology. Rome, however, was not built in a day and the enormity of providing help to taxpayers in a way that is entirely new may not be high on the government’s agenda.
Interestingly, the OTS have suggested that HMRC join up with the tax profession to improve the quality of guidance and that two advisory bodies be created which would include non-HMRC staff. There are genuine benefits to be had from this recommendation but HMRC may become precious about their own guidance and there may also be tax practitioners who shun the proposal of doing the Revenue’s work for them.